US Judge denies Elon Musk's request to end oversight of his Tesla tweets

Elon Musk
"Musk’s argument... is meritless and, in this case, particularly ironic." Photo credit: Getty Images

Elon Musk may soon be the owner of Twitter, but a judge in the US has slapped down the billionaire by saying he can't avoid scrutiny for his tweets about Tesla.

In his written opinion, US District Judge Lewis Linman said the controversial billionaire couldn't break his 2018 settlement with the Securities and Exchange Commission (SEC) just because he wanted to.

"Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now - once the spectre of the litigation is a distant memory and his company has become, in his estimation, all but invincible - wishes that he had not," Judge Linman wrote.

The world's richest man has sought to scrap the settlement requiring his tweets about Tesla to be pre-approved by the company's lawyers, saying it was a breach of his right to free speech.

The judge disagreed and said Musk, by signing the consent decree, had agreed to the provision requiring pre-approval of any written communications that contain information material to Tesla or its shareholders.

"He cannot now complain that this provision violates his First Amendment rights," Judge Linman wrote.

The agreement, along with US$20 million fines for both Musk and Tesla, were made after he falsely tweeted he had funding secured to take the EV company private at US$420 per share. That was a significant premium on the share price at the time, causing the price to spike, but later turned out to be a lie or 'joke'.

The latest battle came after Musk polled his millions of Twitter followers on whether he should sell 10 percent of his Tesla stock. That sent the share price sharply down.

The commission issued a subpoena wanting to know if the tweet had been signed off as Musk had previously agreed. The bombastic billionaire hit back, saying it was just another example of SEC bad faith and "harassment".

The judge was not impressed with that argument.

"Musk's argument that the SEC has used the consent decree to harass him and to launch investigations of his speech is meritless and, in this case, particularly ironic," Judge Linman wrote.

"The Supreme Court has instructed that 'modification should not be granted where a party relies upon events that actually were anticipated at the time it entered into a decree'.

"Musk could hardly have thought that at the time he entered the decree he would have been immune from non-public SEC investigations."

Judge Linman said that Musk should have been expecting questions from the SEC regarding his Twitter poll.

He also said the argument the SpaceX CEO was under "financial duress" when he signed the 2018 agreement was "wholly unpersuasive", noting he was already a multi-billionaire.