Final Dismissal of SEC Regulation Nullification Lawsuit
Tesla Financial and Management-Related Tweets
Must Consult In-House Counsel in Advance
Elon Musk, CEO of Tesla, is no longer allowed to post content related to company management recklessly on X (formerly Twitter).
On the 29th (local time), according to the Associated Press and Bloomberg News, the U.S. Supreme Court dismissed a lawsuit filed by CEO Musk seeking to end the 2018 agreement with the U.S. Securities and Exchange Commission (SEC).
Previously, in August 2018, CEO Musk caused a commotion by tweeting that he was considering taking Tesla private, then retracting the statement. As a result, the SEC sued Musk for stock fraud, and Tesla’s in-house lawyers agreed to review Musk’s tweets in advance as a condition of the settlement with Musk’s side.
According to the agreement, CEO Musk must consult with in-house lawyers before posting on social media service (SNS) any information related to Tesla’s production figures, new business areas, or financial status. However, 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 dropped more than 15% over a week.
In response, the SEC launched an investigation to determine whether CEO Musk violated the 2018 agreement. Musk then filed a lawsuit against the SEC in 2022, claiming that the SEC’s actions infringed on his freedom of expression.
However, the lawsuit was dismissed both in the first trial and on appeal. In May of last year, the appellate court ruled that since Musk himself had allowed censorship of his 2018 tweets, he had no right to raise issues simply because he changed his mind. Musk appealed to the Supreme Court, but it was not accepted this time either. The Supreme Court did not provide any specific explanation for dismissing Musk’s claims.
Meanwhile, X has recently appointed new safety officers and is working to restore its brand image. This move is interpreted as a strategic effort after companies disappointed by X’s neglect of extremist content have successively withdrawn their advertisements, impacting revenue. According to Sensor Tower, a global app market analytics firm, the average daily active users of X’s mobile app in the U.S. in February were 27 million. This represents an 18% decrease compared to the same period last year and a 23% decline compared to November 2022, shortly after Musk acquired X.
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