US court rejects Musk’s ‘Twitter sitter’ appeal

Washington — The US Supreme Court declined on Monday to hear Elon Musk’s bid to throw out part of a securities fraud settlement with the Securities and Exchange Commission (SEC) restricting the billionaire business magnate’s public statements about his electric car company Tesla.

The justices turned away Musk’s appeal of a lower court’s decision upholding the 2018 settlement reached after he said on social media that he had “funding secured” to take Tesla private — a statement the SEC in a legal action called false and misleading.

Musk’s settlement resolved the SEC lawsuit accusing him of defrauding investors. Under the agreement, Musk and Tesla each paid $20m fines and he gave up his role as the company’s chair. Musk also agreed to let a Tesla lawyer preapprove some posts he made on the social media platform then called Twitter before Musk bought the company and renamed it X.

Musk later sought to terminate the pre-approval mandate, with his lawyers in a court filing calling it a “government-imposed muzzle” that amounted to an illegal prior restraint on his speech.

US district judge Lewis Liman in Manhattan in 2022 rejected Musk’s request. A three-judge panel of the Manhattan-based Second US Circuit of Appeals in 2023 upheld that decision. It said Musk chose to allow screening of his Twitter posts, and had no right to revisit the matter “because he has now changed his mind”. It denied Musk’s request to rehear the case, prompting his appeal to the Supreme Court.

Musk’s lawyers argued that the SEC had no right to impose, as a condition of settling, a “gag rule” that they contend violated the US constitution’s first amendment constraints on governmental limits on free speech.

Reuters