- The request by Elon Musk to annul the settlement with the US Securities and Exchange Commission catches the interest of the Supreme Court.
- According to Musk and his attorneys, the initial agreement violated his freedom of speech and subjected him to frequent threats.
It can be recalled that Elon Musk conceded to the US Securities and Exchange Commission after a 2018 tweet that hinted that he would take Tesla private when its share price reaches $420. The tweet caused the Tesla stock price as well as his fortune to increase. Later, the US Securities and Exchange Commission responded over alleged market manipulation. Musk and Tesla agreed on a $20 million settlement in addition to his related posts being subjected to pre-screening by an in-house lawyer.
According to the latest report, Elon Musk is attempting to annul that agreement as his attorneys claim the provision violates his free speech right. On December 7, Musk’s lawyers filed a petition arguing that the initial agreement does not only restrict his speech, but also subject him to threats, fines, and imprisonment.
It extends to speech not covered by the securities laws and with no relation to the conduct underlying the SEC’s civil action against Mr. Musk. And it chills Mr. Musk’s speech through the never-ending threat of contempt, fines, or even imprisonment for otherwise protected speech if not pre-approved to the SEC’s or a court’s satisfaction.
Elon Musk Accuses Authorities of Forcing Settlement on Him
According to Musk, the authorities forced him to agree to those conditions.
I was forced to concede to the SEC unlawfully, those bastards.
Musk also alleged that banks threatened to withdraw support for Tesla if he did not settle with the SEC. He labels this as “sticking a gun to your child’s head.”
This appeal was dismissed by the circuit court. The US Supreme Court has however taken a keen interest in the case as they ask the Biden administration to weigh in on the appeal. According to Bloomberg, the justices have asked Solicitor General Elizabeth Prelogar to respond by January 22.
According to Columbia Law School professor Eric Talley, this looks like a “swing for the fences” move. Musk would need four out of the nine justices to agree to take the case to be able to win a hearing from the Supreme Court. When that happens, Dogecoin (Doge) which he claims to be his favorite crypto could respond marginally according to some analysts. Others also believe the outcome of this case may have no effect on the meme coin considering the nature of the case.
Talley explains that the unconstitutional conditions cited by Elon Musk come into play when the government is doling out different types of general public benefits. This includes getting a tax break for agreeing not to criticize the Supreme Court.
It’s at core a very slippery doctrine. But this case is more like the government agreeing to forebear from pursuing charges against someone in exchange for their agreement to cooperate with the terms of the settlement. That’s not general doling out of benefits.
Musk earlier had a legal showdown with the SEC after he joined Mark Cuban to submit an amicus brief to the Supreme Court, contesting the Agency’s practice of conducting internal trials without the involvement of juries. His acquisition of Twitter in 2022 also got the attention of the SEC who examined whether there was a breach of securities laws through his stock acquisition in relation to the deal.
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