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Musk bid to scrap deal with US securities regulators over Tesla tweets rejected

Elon Musk (Susan Walsh/AP)
Elon Musk (Susan Walsh/AP)

Elon Musk’s request to scrap a settlement with US securities regulators over 2018 tweets claiming he had the funding to take Tesla private has been denied by a federal judge in New York.

Judge Lewis Liman also denied a motion to nullify subpoenas of Mr Musk seeking information about possible violations of his settlement with the Securities and Exchange Commission (SEC).

Mr Musk had asked the court to throw out the settlement, which required that his tweets be approved by a Tesla lawyer.

The SEC is investigating whether the Tesla chief executive violated the settlement with tweets last November asking Twitter followers if he should sell 10% of his Tesla stock.

The Tesla logo
Tesla remains public (John Walton/PA)

The whole dispute stems from an October 2018 agreement with the SEC in which Mr Musk and Tesla each agreed to pay 20 million dollars (£15.9 million) in civil fines over Mr Musk’s tweets about having the money to take Tesla private at 420 dollars per share.

The funding was far from secured and the electric vehicle company remains public, but Tesla’s stock price jumped.

The settlement specified governance changes, including Mr Musk’s ousting as board chairman, as well as pre-approval of his tweets.

Musk lawyer Alex Spiro contended the SEC is using the settlement and “near limitless resources” to chill Mr Musk’s speech.

He says that Mr Musk signed the settlement when Tesla was a less mature company and SEC action jeopardised the company’s financing.

He also alleged that the subpoena from the SEC is illegal, and that the agency cannot take action about Mr Musk’s tweets without court authorisation.

But in a 22-page ruling, Judge Liman wrote that Mr Musk’s claim that economic duress caused him to sign the settlement is “wholly unpersuasive”.

Even if Mr Musk was worried that litigation with the SEC would ruin Tesla financially, “that does not establish a basis for him to get out of the judgment he voluntarily signed”, Judge Liman wrote.

The judge also said the argument that the SEC had used the settlement order to harass Mr Musk and launch investigations was “meritless”.

“Musk could hardly have thought that at the time he entered the decree (settlement) he would have been immune from non-public SEC investigations,” Judge Liman wrote.

“It is unsurprising that when Musk tweeted that he was thinking about selling 10% of his interest in Tesla … that the SEC would have some questions.”