FOX Business’ Madison Alworth reports from Times Square in New York City.
A U.S. district judge has denied Tesla CEO Elon Musk‘s motion to terminate a 2018 settlement from the Securities and Exchange Commission after he and the electric vehicle maker accused the regulator of “weaponizing” it to harass them with “unrelenting investigation” and “chill” Musk’s exercise of First Amendment rights.
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The settlement was reached to resolve a lawsuit against Musk claiming he made “false and misleading” statements in a now infamous tweet about having “funding secured” to take Tesla private at $420 per share. Under the terms of the settlement, Musk is required to vet any tweets related to Tesla with a lawyer before sending them out.
During the TED2022 conference earlier this month, Musk maintained that funding to take Tesla private “was indeed secured” at the time and that he was “forced to concede to the SEC unlawfully” in order to save Tesla.
“At the time, Tesla was in a precarious financial situation, and I was told by the banks that if I did not agree to settle with the SEC that the banks would cease providing working capital, and Tesla would go bankrupt immediately. So that’s like having a gun to your child’s head,” Musk explained. “So I was forced to concede to the SEC unlawfully. Those bastards. And now it makes it look like I lied when I did not, in fact, lie. I was forced to admit that I lied to save Tesla’s life, and that’s the only reason.”
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District Judge Lewis Liman called Musk and Tesla’s claims of harassment “meritless” and “particularly ironic.”
“Musk could hardly have thought that at the time he entered the decree he would have been immune from non-public SEC investigations,” Liman wrote in his ruling on Wednesday.
He also argued that Musk’s claim of economic duress is “wholly unpersuasive,” citing the fact that Musk was already a multi-billionaire in 2018.
Tesla and Elon Musk have accused the Securities and Exchange Commission of failing to distribute $40 million to the company’s shareholders as part of a 2018 settlement to resolve securities fraud charges. (Natan Dvir and Joshua Roberts/Bloomberg via Getty Images)
“Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now — once the specter of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not,” Liman added.
In addition, Liman denied Musk’s motion to quash portions of an administrative subpoena from the regulator seeking information on Tesla’s “governance processes around compliance with the SEC settlement, as amended.” The subpoena came shortly after Musk issued a poll on Twitter asking if he should sell 10% of his stake in Tesla.
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Musk’s lawyer, Alex Spiro, told FOX Business that “nothing will ever change the truth, which is that Elon Musk was considering taking Tesla private and could have.”
“All that’s left some half decade later is remnant litigation which will continue to make that truth clearer and clearer,” Spiro added.
The SEC declined to comment on the ruling.
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Liman’s ruling comes days after Twitter accepted Musk’s offer to take the social media giant private at $54.20 per share. Musk has secured approximately $46.5 billion to finance the transaction, including $25.5 billion of fully committed debt and margin loan financing and $21 billion in equity financing.
The transaction is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TWTR | TWITTER INC. | 48.53 | -1.14 | -2.29% |
The deal came after Musk disclosed a 9.2% stake in the company following his criticism of the platform’s approach to free speech. Musk has been accused of illegally delaying disclosing his stake in Twitter to the SEC so that he could buy more shares at lower prices.
