Elon Musk may want to be careful what he wishes for

(Reuters) – If there’s one thing I’ve learned over the years in journalism, it’s this: A good editor is your best friend, saving you from all kinds of mishaps.

This is also the reason why Elon Musk wants to be careful what he wishes for. Musk moved last week to appeal a decision by a federal judge in Manhattan that refused to terminate a 2018 agreement with the US Securities and Exchange Commission that required internal Tesla lawyers to pre-approval of some of Musk’s tweets.

Tesla CEO, “technoking” (yes, that’s his official nickname) and his attorneys at Quinn Emanuel Urquhart & Sullivan are positioning this as a violation of Musk’s First Amendment rights — the world’s richest person is being gagged by an internal “Twitter babysitter.”

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It’s “irrelevant to whom the SEC has assigned this duty to; Cowen’s partner Alex Spiro, who did not respond to requests for comment from him or his client, wrote that Mr. Musk’s letter is restricted as a result of the SEC’s lawsuit.” Tesla also did not respond to a request for comment. .

A spokesman for the Securities and Exchange Commission declined to comment.

A little self-control isn’t always a bad thing. It’s not a violation of the First Amendment to have a cooler cue if you’ve written something that may be inaccurate or misleading before you tweet it to your 99 million followers — especially if doing so could have significant financial implications.

If anything, Musk may consider expanding an internal legal review of his tweets rather than seeking to have them rescinded, given his past social media strides.

In July 2018, for example, Musk in a tweet called British caveman Vernon Unsworth a “simulated man” after he insulted Musk’s plan to build a small submarine to rescue 12 Thai schoolchildren trapped by rising flood waters in a cave.

Unsworth hit Musk with a $190 million defamation lawsuit, although he came out empty-handed after a jury dismissed his allegations in December 2019.

However, Musk acknowledged on the platform that his tweet “caused a complaint – for many people – that it was definitely hurtful to my team,” according to the trial transcript, adding that the comment “was not helpful.” “

“Unhelpful” also describes a tweet he made less than a month after the “Pedo guy” message.

in August. On September 7, 2018, Musk wrote on Twitter that he had secured “secured financing” to acquire Tesla at $420 a share, a significant premium to the electric car maker’s trading price at the time.

Over the next few hours, Tesla stock jumped 6%, but according to a subsequent securities fraud complaint filed with the SEC, Musk “did not discuss, let alone confirm, the terms of the key transaction, including the price, with any potential funding source.” “

The case was settled promptly without admitting or denying wrongdoing. Among the perks, Musk and Tesla have agreed to consent to any written communications — including social media — that contain “informational materials of Tesla or its contributors” prior to publication by the internal advisor.

The ostensible point was not to prevent Musk from being his internet freak (for example, his recent tweets asking his followers to share their favorite cheese), but to prevent him, in the SEC’s words, from “spreading false content or inaccurate information.” About Tesla.

This is a good thing, isn’t it?

A few months later, Musk was back in hot water with the Securities and Exchange Commission (SEC) for failing to pre-approval on a tweet stating that Tesla didn’t build any cars in 2011, but would make about 500,000 in 2019.

No not quite.

According to the SEC, Tesla’s internal advisor “When first seeing the tweet along with the general public via Musk’s Twitter feed, I immediately arranged a meeting with Musk” (I imagine utter panic?) to craft a correction.

Musk later tweeted: “We are supposed to say that the annual production rate at the end of 2019 is probably around 500,000, which is 10,000 cars per week. Deliveries during the year are still around 400,000.”

A little flattering, yes — but then again, I expect this information from the Fortune 500 CEO to be unequivocally accurate the first time around.

Lawyers (and editors) are allies, not enemies, in preventing these kinds of errors, and Musk does himself no favors if he takes them out of the process.

It’s not clear if that’s what happened in November 2021, when Musk in a pair of tweets asked his Twitter followers if he should sell 10% of his Tesla stock. (7 million people voted, compared to 58% who said yes.)

Musk’s lawyers for Queen Emmanuel argued in court papers that the query was merely a public survey, a “means of gathering information.”

It may have been, but the SEC responded by issuing subpoenas to Musk and Tesla. US District Judge Lewis Lehman in Manhattan called it “unsurprising” after these tweets, “The Securities and Exchange Commission will have some questions.”

Among them: Are tweets pre-approved?

If that were the case, Lehman wrote, Musk might have strong defenses at least regarding some of the potential violations the Securities and Exchange Commission is investigating. On the other hand, if he intentionally oversteps these measures, this evidence will also suggest a much greater level of blame.”

Musk’s lawyers object that the Securities and Exchange Commission is harassing him, “using its near-unlimited resources to quell Mr. Musk’s First Amendment rights through endless extralegal investigations.”

I suspect this would be a tough sell for the second circuit – Lyman’s rejection of Musk’s claims was fading. But perhaps the CEO of Tesla will come to realize that when it comes to tweeting about Tesla, it is better to ask for permission than for forgiveness — at least when the SEC does.

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The opinions expressed are those of the author. They do not reflect the views of Reuters News Agency, which is committed under the principles of trust to impartiality, independence and freedom from bias.

Jenna Green

Thomson Reuters

Gina Green writes about business and legal culture, takes a broad look at trends in the profession, confronts beyond cases, and twists drama in courtrooms. A longtime historian of the legal industry and high-profile litigation, she lives in Northern California. Contact Greene at jenna.greene@thomsonreuters.com


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