Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Musk claims in court brief that SEC is unlawfully muzzling him

Tesla chief executive Elon Musk (Susan Walsh/AP)
Tesla chief executive Elon Musk (Susan Walsh/AP)

US securities regulators are unlawfully muzzling Tesla chief executive Elon Musk, violating his free speech rights by continually trying to enforce a 2018 securities fraud settlement, Mr Musk’s lawyer contends in a court brief.

The document, filed late on Tuesday with the federal appeals court in Manhattan, was written to support Mr Musk’s appeal over a lower court’s April decision to uphold the settlement with the Securities and Exchange Commission (SEC).

The brief says that a provision in the settlement requiring Mr Musk to get prior approval before tweeting about the electric car company is an illegal “government-imposed muzzle on Mr Musk’s speech before it is made”.

The settlement required that his tweets be approved by a Tesla lawyer before being published.

A Tesla vehicle being charged
Elon Musk is chief executive of Tesla (John Walton/PA)

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

But in the brief, Musk lawyer Alex Spiro contends that the SEC is continually investigating Mr Musk for topics not covered by the settlement.

It asks the Second Circuit Court of Appeals to strike or modify the prior approval provision.

“The pre-approval provision in the consent decree qualifies as a prior restraint on speech that runs afoul of the First Amendment,” Mr Spiro wrote.

“It forbids future lawful speech on a range of topics absent approval.”

Further, Mr Musk’s speech is chilled by the threat of SEC investigations and prosecution for contempt of court, the brief said.

The whole dispute stems from an October 2018 agreement with the SEC that Mr Musk signed.

He and Tesla each agreed to pay 20 million dollars (£18.7 million) in civil fines over Mr Musk’s tweets about having the “funding secured” to take Tesla private at 420 dollars per share.

A person uses the Twitter app on an iPhone
The settlement required that Elon Musk’s tweets be approved by a Tesla lawyer before being published (Andrew Matthews/PA)

The funding was far from locked up, 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.

In April, US District Judge Lewis Liman in New York rejected Mr Musk’s bid to throw out the settlement that he signed with the SEC.

He also denied a motion to nullify a subpoena of Mr Musk seeking information about possible violations of the settlement.

Judge Liman’s ruling said that Mr Musk made the tweets without getting pre-approval, but the judge later wrote that he did not mean to pass judgment on that issue.

The SEC would not comment on Wednesday.

Mr Spiro writes that Mr Musk’s waiver of his First Amendment rights in the settlement was not voluntary because there was no way for Mr Musk to know how far reaching it was.

“The provision applies to future speech about circumstances no-one could anticipate in advance,” he wrote.

Elon Musk
Elon Musk (PA)

Mr Musk, he said, is under constant threat that the SEC will disagree with his interpretation of what he can say.

Mr Musk also agreed to the deal when Tesla was a smaller company and the SEC action could have jeopardised its financing.

“The SEC has maintained constant investigations into Mr Musk’s speech, employing nebulous interpretations of the consent decree seemingly designed to curb and chill his future speech, all regarding speech entirely unrelated to the 2018 tweet for which the SEC initiated this action,” Mr Spiro wrote.

Tesla is now the most valuable carmaker in the world, and Mr Musk is the world’s wealthiest person.

Judge Liman ruled 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 Mr Musk’s argument that the SEC had used the settlement order to harass Mr Musk and launch investigations was “meritless”.