Elon Musk Lawyers Challenge US Market Watchdog's 'Muzzle' on His Tweets

The SEC has required Tesla to pre-approve all Elon Musk's social media posts after he tweeted in August 2018 he had "funding secured" to take the company into private equity ownership. That prompted a surge in the Tesla share price, helping catapult Musk to the status of world's richest man.

Lawyers for Tesla CEO Elon Musk have urged a US appeals court to overturn the stock market watchdog's limits on his social media posts.

In court documents filed with the 2nd US Circuit Court of Appeals in Manhattan late on Tuesday, the world's richest man's attorneys challenged the constitutionality of the 2018 'consent decree' by the US Securities and Exchange Commission (SEC).

The documents called the order, requiring Tesla to approve some of Musk's tweets before he can send them, a "government-imposed muzzle" that ran "contrary to the American principles of free speech and open debate."

Musk's lawyers are appealing an April 27 decision by US District Judge Lewis Liman that rejected their application to have the decree overturned. Liman accused Musk of "bemoaning" rules he no longer wanted to obey now that "his company has become, in his estimation, all but invincible."

The SEC decree was agreed as part of a settlement in a fraud case against the electric car tycoon over a tweet he posted on August 7, 2018.

Musk claimed he had "funding secured" to take the company he founded into private equity ownership with an offer of $420 a share. That caused a surge in the value of Tesla stock, helping send his personal worth soaring to around $250 billion, as quoted by several sources.

Tesla and Musk personally each paid £20 million in civil fines as part of the agreement, while he stood down as company chairman.

The SEC opened another probe into Musk after he posted a tweet on November 6, 2021, asking his followers if he should sell out his 10 per cent stake in Tesla to pay tax bills levied on his stock options.

The billionaire's lawyers said their client was under "constant threat" from the SEC.

"Under the shadow of the consent decree, the SEC has increasingly surveilled, policed, and attempted to curb Mr. Musk’s protected speech that does not touch upon the federal securities laws," his attorneys wrote. "Any objective served by the pre-approval provision has been served."

Musk is also embroiled in a court case with Twitter itself over his decision to pull out of a much-publicised $44 billion takeover of the social media giant.

Musk claims Twitter failed to disclose huge numbers of phony accounts, dubbed 'bots', on its network — and even paid its former head of online security $7 million to keep quiet about it.