The latest ruling from the US Court of Appeals has restrained Elon Musk from tweeting except if he gets approval from Tesla attorneys. In other words, every tweet by Elon Musk must be approved by Tesla's attorney before it is published on the microblogging platform.
Interestingly, this is part of the settlement with securities regulators after his 2018 tweets claimed that he had secured the funding required to take Tesla private. When he made this tweet in 2018, it caused a lot of havoc on the stock market as the price of Tesla stock increased astronomically.
The unexpected aftereffect of the tweet caused the Securities and Exchange Commission to take the billionaire to court over his Twitter activity. In the latest ruling, the judge presiding over the case ruled in SEC's favor, saying that every tweet by Elon Musk must be regulated at this point to prevent a repetition of the 2018 incident.
On Monday, the summary order by the 2nd U.S. Circuit Court of Appeals in Manhattan came in after days of hearing from different attorneys. A three-judge panel heard lawyers' arguments in the Elon Musk Twitter case before making the decision. Before this ruling, Elon Musk had initially appealed another verdict by a lower court that required him to abide by the consequences of the circumstances he created in 2018.
Details of the New Ruling
The new ruling, which favored the Securities and Exchange Commission, required Elon Musk first to get his tweet approved by a Tesla attorney before it made its way to Twitter. Besides having his tweets approved by an attorney, Elon Musk will also have to pay some fines for his 2018 tweet. The Securities and Exchange Commission will require him to pay for the damages caused by tweeting that he had gotten funding secured when he hadn't done so. Since Elon Musk failed to take Tesla private at $420 per share, the electric car company is still public.
Despite Elon Musk trying to argue that the Securities and Exchange Commission wanted to clamp down on his freedom of speech, the court said it does not see any "evidence to support Musk’s contention that the SEC has used the consent decree to conduct bad-faith, harassing investigations of his protected speech." Instead, the court justified SEC's attempt to sue Musk in court. The court stated that the SEC has only made three arguments on Elon Musk’s tweets, and each of the tweets" plausibly violated the terms of the consent decree."
SEC's Comments on the Latest Ruling
The Securities and Exchange Commission didn't immediately respond to a request to comment on the latest ruling. Tesla's attorney didn't also respond to requests for comment.
The Securities and Exchange Commission has investigated Elon Musk and Tesla over more than one tweet. Apart from the tweet Elon Musk made in 2018, the commission is also investigating Elon Musk based on his comments in 2021. In 2021, the billionaire asked his followers if he should sell about 10% of his Tesla shares. The investigation being done by the SEC is to know if this other tweet also violates the law.