The Supreme Court recently denied Elon Musk’s request to back out of a settlement agreement he had made with the Securities and Exchange Commission in 2018. This settlement was in response to allegations that Musk had made fraudulent statements about Tesla in a series of tweets. One tweet in particular claimed that he had secured funding to take Tesla private at $420 per share, which led to significant fluctuations in the company’s stock price. To avoid enforcement action, Musk agreed to the settlement, which included a provision requiring a company lawyer to approve his social media posts about Tesla. Despite agreeing to this provision, Musk has since challenged it as a violation of his First Amendment rights.
Musk purchased Twitter in 2022 and renamed it X. He has been critical of the Twitter sitter provision and has argued that it limits his freedom of speech. However, the US District Court and the 2nd US Circuit Court of Appeals rejected Musk’s request to have the provision declared unenforceable. In a statement, a three-judge appeals court panel stated that there was no evidence to support Musk’s claim that the SEC had conducted bad-faith investigations of his protected speech. They also noted that Musk had the option to litigate against the SEC’s charges or negotiate a different agreement but chose not to do so.
The Supreme Court’s rejection of Musk’s appeal was made without comment, and there were no noted dissents. This decision signifies the courts’ support for the settlement agreement and the Twitter sitter provision. Despite Musk’s objections, it appears that he will be required to continue having his social media posts about Tesla approved by a company lawyer. This case raises questions about the limitations of free speech when it comes to public figures like Musk and the responsibilities they have to ensure that their statements are accurate and compliant with regulatory requirements.
Musk’s legal battle with the SEC underscores the challenges that high-profile individuals face when navigating the intersection of social media, corporate governance, and regulatory compliance. By agreeing to the settlement in 2018, Musk sought to avoid further enforcement action from the SEC. However, his subsequent challenges to the Twitter sitter provision have led to a prolonged legal battle that has now been rejected by the highest court in the United States. This case serves as a reminder of the importance of transparency and accountability for public figures, especially when it comes to communicating about publicly traded companies like Tesla.
The implications of this Supreme Court decision extend beyond just Elon Musk and Tesla. It sets a precedent for how courts will interpret settlement agreements between individuals and regulatory agencies, particularly when it comes to restrictions on speech. The courts’ support for the Twitter sitter provision reaffirms the importance of accountability and oversight for individuals in positions of power, even when it comes to their personal statements on social media. As social media continues to play an increasingly prominent role in public discourse, cases like this one will continue to shape the legal landscape surrounding free speech and corporate governance.
