SEC rejects Elon Musk's argument to get out of 2018 settlement

Feb. 24 (UPI) -- The Securities and Exchange Commission rejected Elon Musk's effort to get out of a previous settlement agreement involving his Twitter posts, telling the U.S. Court of Appeals Second Circuit in a letter that it had the authority to make such enforcement.

The SEC said Musk remains free to post about Tesla as long as the information is "accurate," but said a verdict by a San Francisco jury that ruled his 2018 tweet inaccurately declaring that he had "funding secured" to take the electric vehicle company private didn't violate securities laws was a "non sequitur."

"The verdict says nothing about the continued public interest in the negotiated settlement term that does not preclude Musk from tweeting accurately about topics but rather requires Tesla to review Musk's Twitter-related communications before publication, including through Musk's Twitter feed -- a communications channel designated by Tesla for disclosure," the SEC letter said.

Musk who founded Tesla -- and has since purchased Twitter -- inaccurately tweeted that he would take the company private for $420 per share. Trading of Tesla was paused following the tweet which sent the shares of the company into a frenzy and prompted an SEC investigation.

Musk and the SEC eventually reached a settlement in which he agreed to have his tweets monitored by an attorney and pay a $20 million fine among other stipulations. Late last year, Musk and Tesla challenged the agreement in a federal appeals court, saying it violates the billionaire's free speech.

The SEC said in its letter that Musk waived his chance to test the commission's allegations "at trial when he voluntarily agreed (twice) to a consent judgment."

Refuting free speech claims, the SEC went on the say the shareholder lawsuit has "no bearing" on its negotiated settlement with Musk and Tesla.

"Even if the verdict were somehow relevant, Musk reads too much into it," the SEC said. "The Commission had no role in that case."