The Securities and Exchange Commission (SEC) has confirmed that Tesla CEO Elon Musk is still required to have lawyers pre-approve any tweets related to the automaker. This comes after the SEC investigated Musk in 2018 over tweeting that he had “funding secured” to take Tesla private for $420 per share — causing fluctuations in Tesla’s share price. The EV maker and Musk settled separately with the SEC for $20 million but admitted no wrongdoing.
In that case, jurors found that Musk’s tweets did not violate Rule 10b-5 — enacted in 2000 to clarify the definition of insider trading — and the SEC’s arguments on appeal lacked support. However, the SEC took issue with Musk attorney Alex Spiro’s argument that winning the case provided relevant authority, arguing instead that a jury verdict in a private securities-fraud action is not applicable. If they find new legal aut hority directly related to the issue raised on appeal, lawyers can submit that as part of supporting an appellate court.
The SEC’s continued battle with Musk may raise questions over protecting free speech in corporate governance. Still, the SEC argues that shareholders need lawyers to pre-approve any tweets related to Tesla because they need accurate information regarding their investments. The agency believes pre-approval of Musk’s tweets might ensure the correct information is disclosed.