Tesla CEO Elon Musk accuses SEC of calculated effort to ‘chill’ his right to free speech by constantly hounding the company with legal challenges
- Lawyers for Elon Musk sent a letter to a federal judge in Manhattan accusing the SEC of harassing him with investigations and subpoenas over his Twitter posts
- In 2018, Musk and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the money to take the company private at $420 per share
- The funding was far from secured and the company remains public
- The settlement specified governance changes, including Musk’s ouster as board chairman, as well approval of Musk’s tweets
- The letter from attorney Alex Spiro accuses the SEC of trying to ‘muzzle’ Musk, largely because he’s an outspoken government critic
- ‘The SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws’ letter reads
Tesla and its Chief Executive Elon Musk has accused regulators of trying to ‘chill’ his free speech.
Musk has accued the U.S. Securities and Exchange Commission (SEC) of harassing Tesla with an ‘endless’ and ‘unrelenting’ investigation to punish Musk for being an outspoken critic of the government, on Thursday.
The accusation came in a letter to U.S. District Judge Alison Nathan in Manhattan, who presided over a 2018 SEC settlement stemming from Musk’s tweet about a potential buyout of Tesla.
‘Mr. Musk and Tesla respectfully seek a course correction,’ wrote Alex Spiro, a lawyer for Musk and Tesla. ‘Enough is enough.’
The SEC declined to comment.
Lawyers for Elon Musk sent a letter to a federal judge in Manhattan accusing the SEC of harassing him with investigations and subpoenas over his Twitter posts
The letter from attorney Alex Spiro accuses the SEC of trying to ‘muzzle’ Musk, largely because he’s an outspoken government critic
Thursday’s letter escalates Musk’s battle with regulators as they scrutinize his social media posts and Tesla’s treatment of workers, including accusations of discrimination.
It followed Tesla’s disclosure on February 7 that it had receiving a subpoena from the SEC about its compliance with the 2018 settlement.
The SEC sued Musk in August 2018 after he tweeted he had ‘funding secured’ to potentially take his electric car company private at $420 per share. In reality, a buyout was not close.
Tesla and Musk settled by agreeing to each pay $20 million in civil fines, and to let Tesla lawyers vet some of Musk’s communications in advance, including tweets that could affect Tesla’s stock price. Musk also gave up Tesla’s chairmanship.
In 2018, Musk and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the money to take the company private at $420 per share
The letter from attorney Alex Spiro accuses the SEC of trying to ‘muzzle’ Musk, largely because he’s an outspoken government critic
The latest subpoena was issued on November 16, ten days after Musk polled his Twitter followers on whether he should sell 10% of his Tesla stake, triggering a sell-off.
In Thursday’s letter, Spiro accused the SEC of ignoring its commitment to distribute to shareholders the $40 million in fines, while instead ‘devoting its formidable resources to endless, unfounded investigations’ into Musk and Tesla.
‘Worst of all, the SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government; the SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights,’ Spiro wrote.
Spiro asked Nathan to schedule a conference to find out why the SEC is ‘issuing subpoenas unilaterally’ without court approval, and why the money isn’t being distributed.
If the SEC found that Musk violated the settlement, it could ask Nathan to throw it out and reopen the case, or pursue new charges.
The letter was filed eight days after California’s Department of Fair Employment and Housing sued Tesla over allegations by Black workers that it tolerated racial discrimination at its Fremont, California, plant.
Tesla called that lawsuit misguided. It is also trying to reduce or throw out an approximately $137 million jury award to a black former elevator operator for subjecting him to a hostile work environment at the Fremont plant.
Separately on Thursday, the National Highway Traffic Safety Administration opened a formal probe into 416,000 Tesla Model 3 and Model Y vehicles after receiving complaints about unexpected braking tied to its Autopilot system.
Tesla has issued 10 recalls since October, including some under pressure from NHTSA.
At the end of Thursday’s trading session, Tesla shares were down 5% at $876.35.
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