🐦 Musk Still Has To Answer To The SEC
The deal isn't officially closed yet and Elon Musk's purchase of Twitter is already courting the world's richest man legal troubles. Last week, a judge ruled that Musk's takeover of the social media company does not get him out of the settlement deal he reached with the SEC back in 2018. Musk claimed publicly in April that the consent decree he agreed to with the SEC has “launched endless, boundless investigation” by the regulatory body.
The settlement with the SEC was a result of an investigation following Musk's infamous tweet about potentially taking Tesla private — a comment which the SEC said was a lie and manipulated stock prices.
In last week's case, US District Judge Lewis Liman ruled that the SEC is entitled to investigate Musk, reports The Verge, and that “he cannot now complain that this provision violates his First Amendment rights.”
Taking It To The Supreme Court
While Musk has publicly justified his bid for Twitter as a defense of freedom of speech, it appears he has also joined an effort by other super-wealthy businessmen to rein in the SEC's power to use gag orders. As the New York Times notes, the SEC has enforced gag orders on settlements since 1972 under the rationale that “if every defendant opted out of a trial but then later reframed the charges to the public, it would undermine the validity of resolutions and the legitimacy of Wall Street’s chief regulators.” In a petition filed by Barry Romeril, the claim is that this gag order rule is a First Amendment violation. Mark Cuban (who also filed an amicus brief) added that the silencing rule “deprives the markets of important information.”
Buying a company doesn’t get you out of the legal trouble you incurred through using that company — but hey, if you’re Elon Musk, the consequences of the law have never really stopped you from doing anything.