Tesla Inc. CEO Elon Musk asked a judge to end a 2018 consent decree with the U.S. Securities and Exchange Commission that he claims is being used “to trample on Mr. Musk’s First Amendment rights and to impose prior restraints on his speech.”
Musk, Tesla’s founder, also asked the judge to block an SEC subpoena for documents relating to the review of his Twitter posts and his sale of stock and options, a court filing on Tuesday showed.
The SEC is investigating whether Musk and his brother Kimbal violated securities laws when selling shares in the company late last year, according to a person familiar with the matter.
Last month, Tesla disclosed that it had received an SEC subpoena on Nov. 16 seeking information about its governance processes and compliance with a settlement it reached with the agency in September 2018 over Musk’s tweets.
In that agreement, Tesla pledged to institute oversight of its CEO’s Twitter posts and other communications about the company after the regulator alleged he had committed securities fraud by saying on the social media platform that he had secured funding for the company to go private.
Tesla and Musk complained last month to U.S. District Judge Alison Nathan that the SEC is targeting them with “unrelenting investigation” for criticizing the government, while failing to pay Tesla shareholders the $40 million that the agency collected in the 2018 settlement.
Musk said in a court affidavit he was “forced to sign” the consent degree because the “SEC’s unrelenting regulatory pressure” and “collateral consequence” of the government complaint against him “stood to jeopardize” Tesla’s ability to raise money.
“I never lied to shareholders,” Musk said on Tuesday. “I would never lie to shareholders. I entered into the consent decree for the survival of Tesla, for the sake of its shareholders.”
The case is U.S. Securities and Exchange Commission v. Musk, 18-cv-08865, U.S. District Court, Southern District of New York (Manhattan).
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