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IPFS News Link • SEC-Securities Exchange Commission

SEC Urges Supreme Court To Reject Elon Musk's First Amendment Appeal

•, by Melanie Sun

Attorneys representing the Securities and Exchange Commission (SEC) have urged the Supreme Court not to hear Elon Musk's appeal of settlement conditions that Mr. Musk says would require that "Americans who settle their cases with the government to 'consent' to be gagged for life."

Elon Musk is challenging the details of a settlement agreement he signed with the SEC requiring him to seek pre-approval for comments about Tesla, of which he is the CEO and former chairman of its board of directors.

He is arguing that his future speech "on matters ranging far beyond the charged violations" cannot be gagged as a condition of settlement by the agency.

However, attorneys for the SEC argue that because the petitioner "concede[d] that his free speech rights do not permit him to engage in speech that is or could be considered fraudulent or otherwise violative of the securities laws" in the district court, this did not preclude him from needing to abide by the settlement conditions to seek pre-approval from Tesla's own attorneys before petitioner speaks publicly about specified matters related to the company, according to court documents.

"Further review is not warranted," the government said.

After a social media post about Tesla by Mr. Musk in August 2018 caused "significant market disruption," both parties agreed that Tesla Inc.'s senior executives would implement policy to require that in-house lawyers pre-approve any public written communications, including social media posts, about the company.

In his post, Mr. Musk had claimed to have "funding secured" to take Tesla private. This sent Tesla shares surging by over six percent. But the SEC sued Mr. Musk, alleging that he had misled shareholders with his remarks, which later did not eventuate.

According to the SEC's complaint, Tesla violated SEC Rule 13a-15, which requires securities issuers to "maintain disclosure controls and procedures" to "ensure that information required to be disclosed" is properly "recorded, processed, summarised, and reported."

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