Updated March 23rd, 2024 at 12:55 IST

US govt requests US Supreme Court to dismiss Musk appeal in SEC dispute

The dispute stems from Musk's 2018 tweet about having "funding secured" to privatise his EV company Tesla, which according to the SEC had misled investors.

Reported by: Business Desk
File photo of Elon Musk. | Image:AP
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Erroneous X post: The Biden administration urged the US Supreme Court to reject Elon Musk's ongoing legal battle with the Securities and Exchange Commission (SEC). 

This dispute stems from Musk's 2018 tweet about having "funding secured" to privatise his electric vehicle company Tesla, which according to the SEC had misled investors.

As part of a settlement with the SEC, Musk and Tesla were each fined $20 million, with Musk giving up his position as Tesla's chairman. 

Additionally, he consented to have Tesla's attorneys review some of his Twitter posts. After purchasing and rebranding Twitter as X in 2022, Musk has criticised the agreement on claims of it restricting his freedom of speech.

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The US Department of Justice argued that the settlement was rightly aimed at preventing Musk from making any misleading statements in the future, which could violate securities laws. 

This statement came after a panel from the 2nd US Circuit Court of Appeals in Manhattan dismissed Musk's complaint that the SEC was using the decree to excessively scrutinise his Twitter activity. The court also turned down Musk's appeal to reconsider their decision in July 2023, stressing that he cannot withdraw from the agreement simply because he has reconsidered his stance.

Musk's legal team has argued against the SEC's imposition of a "gag rule" as part of the settlement, claiming it infringes upon the constitutional right to free speech by requiring Musk to obtain prior approval for specific social media postings, thus granting the SEC excessive control.

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In a related legal matter, the 5th US Circuit Court of Appeals in New Orleans has decided to reevaluate its March ruling that Musk broke federal labour laws with a May 2018 tweet indicating Tesla employees would forfeit stock options if they came together. The court reviewed arguments in this case in January.

(With Reuters Inputs)

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Published March 23rd, 2024 at 12:55 IST