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Elon Musk asks court to scrap SEC agreement over his tweets, claiming he was ‘forced’ to enter into it

The Tesla and SpaceX CEO also asked the judge to find a subpoena related to the settlement ‘was issued in bad faith’

Tesla and SpaceX chief executive Elon Musk speaks in Washington on March 9, 2020. (Susan Walsh/AP)

SAN FRANCISCO — Elon Musk is asking a federal judge to throw out a 2018 agreement governing his tweets, alleging he felt boxed in by multiple sources of pressure at the time and he entered into it to protect Tesla shareholders.

Musk, the Tesla CEO, came under fire for a tweet that year where he said he had “Funding secured” to take Tesla private at $420 a share, a claim later determined to be untrue but that sent the stock price up at the time. Musk and Tesla were each fined $20 million. Musk additionally had to step down as Tesla board chairman and agreed to have his potentially market-moving communications vetted by an approved securities lawyer.

Elon Musk and the SEC resolve dispute over the Tesla CEO’s tweets

Musk said in the Tuesday filing in the Southern District of New York that he was “forced” to sign the 2018 consent decree, as a result of “the SEC’s unrelenting regulatory pressure, combined with the attendant collateral consequence of the SEC’s complaint against me.” Tesla at the time was facing regulatory scrutiny combined with a production crunch for its mass market-aimed Model 3.

“Tesla was a less mature company and the SEC’s action stood to jeopardize the company’s financing,” his legal filing said. “Defending against the SEC’s action through protracted litigation was not in the interests of the company and its shareholders. As Tesla’s CEO and Chairman at the time, I perceived that the company and its shareholders would be placed at undue risk unless I settled the matter promptly.”

Tesla did not immediately respond to a request for comment. The company does not typically respond to media requests after disbanding its public relations team in 2020. The SEC declined to comment.

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Musk also doubled down on his 2018 tweet in the filing. He said the funding “was secured, and there was investor support,” using italics for emphasis on both claims.

Musk denied lying to shareholders and said he entered into the agreement to ensure Tesla’s survival as a company. Meanwhile, he asked the court to find a Nov. 29 subpoena related to the agreement “exceeds the investigatory power of the Commission and was issued in bad faith.”

The Wall Street Journal reported last month that the SEC was investigating whether trades by Musk and his brother violated insider trading rules.

Musk had conducted a Twitter poll in November asking his followers whether he should sell 10 percent of his Tesla shares, a move that preceded massive stock sales on Musk’s part equating to around that figure — though the Twitter poll was seen as an effort to justify, rather than drive, the sales.

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