"Don't Tweet Recklessly"... Musk Loses Again to US SEC

Posting Tesla Tweets Without Internal Legal Team Approval
Appealed SEC Guidelines but Lost Again

Elon Musk, CEO of Tesla, appealed against the U.S. Securities and Exchange Commission (SEC) guideline that prohibits him from posting content related to Tesla management on Twitter without prior approval from the company's legal team, but he lost again.

[Image source=Yonhap News]

The U.S. Court of Appeals for the Second Circuit in Manhattan, New York, on the 15th (local time) dismissed Musk's appeal seeking to end the 2018 agreement with the SEC.

The issue originated from the Tesla delisting controversy five years ago. At that time, Musk tweeted that he was considering taking Tesla private but later reversed his statement. The SEC accused Musk of stock fraud, claiming he caused market confusion. Subsequently, Musk and Tesla paid a total fine of $40 million (approximately 53.6 billion KRW) and agreed with the SEC that Tesla's in-house lawyers would pre-review some of Musk's tweets to prevent a recurrence of similar incidents.

However, this agreement did not stop Musk. In November 2021, Musk posted on Twitter that he might sell 10% of his Tesla shares and conducted a poll asking for opinions on the matter. Following this, Tesla's stock price fell more than 15% over a week.

The SEC launched an investigation into whether Musk violated the 2018 agreement, and Musk filed a lawsuit in March last year, claiming that such measures infringed on his freedom of expression.

The result was a loss for Musk. The trial court ruled in favor of the SEC, and the appeals court also rejected Musk's claims on this day.

The court stated, "The Twitter posts under investigation violated the relevant agreement," and "Musk allowed censorship of his tweets at the time of the 2018 agreement. He has no right to raise issues just because he changed his mind."