Elon Musk on Monday suffered a legal setback over an agreement the Tesla CEO entered into that limits his freedom to write about the electric automobile company he owns on the social media platform he now owns too, CNBC reports.
Musk had sought to unwind parts of a consent decree Tesla agreed to with the Securities and Exchange Commission to settle civil securities fraud charges in 2018.
The SEC revised the consent decree in 2019 after the agency charged Musk with making “false and misleading” statements in his August 2018 “funding secured” tweets in which the Tesla CEO claimed to have found a buyer to take the company private at $420 a share, a claim subsequently deemed false by a federal judge.
The agreement required Musk to have any tweets that included information material to Tesla subject to “pre-approval,” the report said.
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Monday’s ruling by a federal appeals court affirms a prior ruling from the U.S. District Court of the Southern District of New York, which first denied Musk’s attempt to unwind parts of the consent decree.
Musk attorney Alex Spiro in a February letter argued that the terms of the consent decree were “unconstitutional” and infringed of Musk’s right to free speech.
Spiro’s claims were dismissed by the U.S. Court of Appeals for the Second Circuit, which in its ruling wrote that it found “no evidence to support Musk’s contention that the SEC has used the consent decree to conduct bad-faith, harassing investigations of his protected speech.”
In addition to legal action from the SEC, Musk has faced a shareholder revolt over his tweets. A San Francisco jury found Musk “not liable” in a February a federal class-action securities fraud trial over his “funding secured” tweets.
The court argued that if Musk had concerns about his freedom to use social media he should have addressed it in negotiations over the consent decree.
The court said in a statement that “Having made that choice” prevented Musk’s legal from arguing “to collaterally reopen a final judgment merely because he has now changed his mind.”
Spiro said in a statement to CNBC that his legal team will continue to pursue the matter.
“We will seek further review and continue to bring attention to the important issue of the government constraint on speech,” Spiro said.
