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Judge knocks down Elon Musk’s bid to end SEC consent decree

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Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China August 29, 2019.

Aly Song | Reuters

A federal judge on Wednesday knocked down Tesla CEO Elon Musk’s bid to terminate a settlement agreement he struck with the Securities and Exchange Commission after the agency charged him with securities fraud in September 2018. The judge also denied Musk’s motion to quash a newer subpoena by the SEC.

The financial regulators had charged Tesla and Musk with making “false and misleading” statements to investors when the CEO announced on Twitter on Aug. 7, 2018, that he was thinking of taking the automaker private at $420 a share and had “funding secured.”

Tesla’s stock price jumped by over 6% after Musk’s tweets, and Tesla trading was halted that day. Shares in the electric-vehicle maker were volatile for weeks after.

As part of a settlement agreement, Tesla and Musk each agreed to pay a $20 million fine. Musk also had to relinquish his role as chairman at Tesla for three years and agreed not to claim innocence or deny the allegations of the SEC’s complaint.

Finally, Tesla and Musk agreed to have the CEO’s tweets vetted by an experienced securities lawyer before posting them if they contained material business information likely to impact Tesla’s share price.

Free speech argument

Denied



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