A federal judge rejected Elon Musk’s request to quash a 2018 agreement with the Securities and Exchange Commission over his claim he had “funding secured” to take his electric vehicle maker Tesla private.
The regulator sued Musk after he allegedly engaged in fraud in August 2018 by telling his 22mn followers on Twitter that had secured financing to take Tesla private at $420 per share.
Musk ultimately settled, agreeing to pay a $20mn fine and step down as Tesla chair. The agreement also forced the billionaire to obtain preapproval for any written communications material to Tesla, including on Twitter, the social media platform that he is now taking private in a $44bn deal.
Musk also agreed he would not deny the allegations of the complaint or imply it was without factual basis.
The SEC subsequently subpoenaed Musk last November after he asked Twitter users if he should sell part of his stake in Tesla, the ruling said, in order to determine if he had sought approval for them. Musk in March asked the court to quash portions of the subpoena and terminate the consent decree, saying the regulator lacked authority to issue the demand and arguing the subpoena was issued in bad faith.
US District Judge Lewis Liman denied the request in a decision on Wednesday: “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 spectre of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not.”
Musk did not immediately return a request for comment on the decision.
The SEC case against Musk has been a headache for the world’s richest man for years, as the regulator has pressed him to produce documents detailing whether certain tweets had been preapproved.
In February 2019, Musk had tweeted that Tesla will produce “around 500k” cars in 2019 — a claim he later clarified was meant to say an annualised rate of 500,000 by the end of the year. The SEC argued the first tweet was false and material. Musk called it merely “celebratory”, but the federal judge said a reasonable observer could have been misled.
Musk had repeatedly clashed with the SEC, and earlier this week referred to its San Francisco office as “shameless puppets of Wall Street”, alleging in a series of tweets that they were colluding with “short seller sharks” to attack Tesla and “doing nothing to protect actual shareholders”.