Elon Musk wants to reverse his $20 million SEC settlement

The Tesla chief claims the SEC is overstepping its boundaries.

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Jon Fingas
March 9, 2022 11:00 AM
In this article: news, gear, regulation, Elon Musk, Tesla, law, SEC
Elon Musk pauses and looks down as he speaks during a press conference at SpaceX's Starbase facility near Boca Chica Village in South Texas on February 10, 2022. - Billionaire entrepreneur Elon Musk delivered an eagerly-awaited update on SpaceX's Starship, a prototype rocket the company is developing for crewed interplanetary exploration. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
JIM WATSON/AFP via Getty Images)

Elon Musk isn't backing down in his rejuvenated campaign against the SEC. Ars Technica reports the Tesla chief has asked a federal court to terminate his $20 million settlement with the SEC in 2018 over claims the regulator both pressured him into an agreement and overstepped its limits. Musk felt "forced" to sign the consent decree at a time when Tesla's financial health was at risk, according to the memorandum of law sent to the court. The EV executive also insisted in a declaration that he told the truth in tweets at the heart of the dispute — he maintained he really had been considering taking Tesla private and had secured funding.

Musk also characterized the SEC's approach as "governmental abuse." Officials were allegedly using the agreement to police Musk's First Amendment free speech rights by requiring that he pass tweets through an approved monitor who would determine what he could say. The SEC has also made compliance "more onerous" than the settlement originally demanded, Musk's attorney argued. The Commission supposedly interpreted the consent decree as granting powers it didn't previously have, letting it issue subpoenas and otherwise conduct "never-ending investigations."

Musk further called for an order determining that a November 2021 subpoena over insider trading allegations exceeded the SEC's authority and was issued in "bad faith." The Twitter poll in question was just meant to gather input, Musk claimed, and not a disclosure of information the exec would have to report to the SEC. The Commission is investigating whether or not Musk's brother Kimbal was aware of the impending poll when he sold Tesla shares one day earlier.

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The entrepreneur has routinely sparred with the SEC. He was teasing the agency mere days after announcing the 2018 settlement, and declared he could tweet what he wanted. Most recently, he and Tesla accused the SEC of mounting a "harassment campaign" to stifle his criticism of the government. The two contended the SEC couldn't issue subpoenas without requiring court approval.

Musk might not want to count on victory, however. The court rejected the previous demands, arguing they weren't specific enough. This latest effort is more focused, but it also hinges on the court accepting Musk's version of events — and that's far from guaranteed.

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