Elon Musk asks Supreme Court to undo ‘Twitter sitter’ agreement with SEC

Tesla
CEO

Elon
Musk
is
asking
the
U.S.
Supreme
Court
to
undo
a
settlement
agreement
that
he
and
the
automaker
struck
with
the
Securities
and
Exchange
Commission
requiring
a
company
lawyer,
or
a
“Twitter
sitter,”
to
review
and
approve
his
Tesla-related
tweets.

In
a
petition
on
Dec.
7,
Musk’s
attorneys
alleged
that
the
“Twitter
sitter”
provision
in
the
agreement
violated
their
client’s
free
speech
rights.
They
argue
Musk
was
coerced
into
agreeing
with
“unconstitutional
conditions.”

The
SEC
charged
Musk
with
civil
securities
fraud
after
he
posted
a
series
of tweets
in
2018
saying
he
had
“funding
secured”
to
take
Tesla
private
for
$420
per
share,
and
that
“investor
support”
for
such
a
deal
was
“confirmed.”

Trading
in
Tesla
was
halted after
his
tweets,
and
shares
remained
volatile
in
the
weeks
that
followed.

Musk
and
Tesla
settled
with
the
regulator
and
then
revised
the

agreement
in
April
2019.
Since
then,
the
SEC
has
continued
to
investigate
Musk
and
Tesla
to
ensure
that
they’re
complying
with
the
terms.

The
settlement
“restricts
Mr.
Musk’s
speech
even
when
truthful
and
accurate,”
his
lawyers
wrote.
“It
extends
to
speech
not
covered
by
the
securities
laws
and
with
no
relation
to
the
conduct
underlying
the
SEC’s
civil
action
against
Mr.
Musk.
And
it
chills
Mr.
Musk’s
speech
through
the
never-ending
threat
of
contempt,
fines,
or
even
imprisonment
for
otherwise
protected
speech
if
not
pre-approved
to
the
SEC’s
or
a
court’s
satisfaction.”

Musk
purchased
Twitter
in
2022
and
renamed
it
X
this
year.
He
is
the
company’s
chairman
and
chief
technology
officer.

Columbia
Law
School
professor

Eric
Talley,
who
specializes
in
corporate
and
business
law,
described
the
effort
as
a
“swing
for
the
fences”
move
in
an
email
to
CNBC.
A
circuit
court
has
already
refused
to
hear
the
appeal.
To
win
a
hearing
from
the
Supreme
Court,
Musk
would
need
four
of
the
nine
justices
to
agree
to
take
the
case.

Talley
said
the
“unconstitutional
conditions”
doctrine
that’s
at
the
heart
of
Musk’s
argument
is
usually
“in
play
when
the
government
is
doling
out
various
types
of
general
public
benefits,”
such
as
getting
a
tax
break
for
promising
not
to
criticize
the
Supreme
Court.

“It’s
at
core
a
very
slippery
doctrine,”
Talley
said.
“But
this
case
is
more
like
the
government
agreeing
to
forebear
from
pursuing
charges
against
someone
in
exchange
for
their
agreement
to
cooperate
with
the
terms
of
the
settlement.
That’s
not
general
doling
out
of
benefits.”

Talley
added
that
for
a
person
of
means
like
Musk,
it
may
be
worth
“spinning
the
judicial
roulette
wheel.”

The
SEC
didn’t
immediately
respond
to
a
request
for
comment.

Separately,
Tesla
investors
have
sued
the
company
and
Musk
over
the
“funding
secured”
tweets
and
their
impact
to
the
stock
price.
In
February,
a
jury
in
a
San
Francisco
federal
court
found

Musk
and
Tesla
were
not
liable in
a class
action
securities
fraud
trial.
The
shareholders
have
filed
for
an
appeal
to
the
9th
Circuit.

Read
the
petition
to
SCOTUS
here: