In a significant ruling on Monday, the Supreme Court declined to hear an appeal from Elon Musk, the CEO of Tesla, regarding a prior settlement with the Securities and Exchange Commission (SEC) that mandates pre-approval of his social media posts about the electric car company, particularly on Elon Musk’s X account.
This decision effectively upholds earlier court rulings that enforce the oversight of Musk’s communications related to Tesla using Elon Musk’s Twitter, which he argued infringed upon his First Amendment rights. The high court provided no commentary while maintaining the status quo set by lower courts, which found no merit in Musk’s claims of “prior restraint.”
The controversy dates back to August 2018 when Musk tweeted that he had “funding secured” to take Tesla private at $420 per share, a claim that caused Tesla’s stock price to surge and trading to temporarily halt. Elon Musk SEC Tesla tweet sparked a flurry of legal and financial repercussions, including an SEC investigation into whether Musk misled investors, concluding that the tweet constituted a breach of securities law’s anti-fraud provisions.
As part of a settlement reached with the SEC, it was agreed that Musk’s tweets, particularly those dealing with substantial corporate matters that could impact market pricing, would require vetting by a Tesla-appointed attorney before posting. The agreement also stipulated that Musk and Tesla would pay civil penalties.
Despite acquiring Twitter in 2022, now rebranded as X, Musk’s legal challenges related to his use of the platform persisted. The SEC revisited its scrutiny over Musk’s compliance with the settlement following a tweet in 2021, wherein Musk queried his followers about selling 10% of his Tesla stock without prior approval from legal counsel.
This Supreme Court’s decision not only underscores the enforceability of regulatory oversight on executive communications in publicly traded companies but also marks a critical reminder of the ongoing tension between corporate governance and individual rights within the upper echelons of corporate America.
