Elon Musk’s lawyer asks court to throw out ‘Twitter sitter’ deal with SEC

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Elon Musk, chief executive officer of Tesla Inc., departs court in San Francisco, California, on Tuesday, Jan. 24, 2023.
Marlena Sloss | Bloomberg | Getty Images

Following Elon Musk’s recent victory in a securities fraud trial, the Tesla CEO’s lawyer has once again asked an appeals court to throw out his 2018 deal with the Securities and Exchange Commission requiring a company lawyer to review his Tesla-related tweets before sharing them.

On Feb. 3, a jury in a in a San Francisco federal court found that Musk and Tesla were not liable in a class-action securities fraud trial stemming from tweets Musk made in 2018.

The centi-billionaire, who is also the CEO of SpaceX and Twitter, was sued by Tesla shareholders over a series of tweets he wrote in August 2018 saying he had “funding secured” to take the automaker private for $420 per share, and that “investor support” for such a deal was “confirmed.”

Trading in Tesla was halted after his tweets, and its share price remained volatile for weeks.

Musk had previously settled with the SEC over the tweets in 2018, and eventually struck a revised settlement agreement that called for a legal and regulatory compliance point person at Tesla (informally, a “Twitter sitter”) to pre-approve any of Musk’s tweets containing any information about the publicly traded company that could affect its stock price. 

Musk’s attorney, Quinn Emanuel Partner Alex Spiro, wrote in a letter to the court this week that the SEC lacks support for their revised settlement agreement in light of the jury’s recent finding.

“The jury’s verdict provides further reason why the public interest in avoiding unconstitutional settlements easily subsumes the SEC’s purported stake in the consent decree,” Spiro wrote in a filing.

Musk and the SEC did not immediately respond to requests for comment.

Attorneys for the shareholders who sued Musk and Tesla over the take-private related tweets still have time to file for an appeal. The lead attorney for the shareholders in that matter, Levi & Korsinsky Partner Nicholas Porritt, did not respond to a request for comment.

At the time of the jury’s decision, on Feb. 3, 2023, Porritt told CNBC via e-mail, “We are disappointed with the verdict and considering next steps.”

Read the letter here.

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