Tesla CEO Elon Musk on Thursday accused the Securities and Exchange Commission of engaging in a “harassment campaign” that “has gone beyond the pale” in its attempts to “chill his exercise of First Amendment rights.”
A complaint filed by lawyers of the world’s richest person and a known loose cannon on Twitter—where he has 74 million followers—argues that federal financial regulators are trying to “muzzle and harass” him because he “remains an outspoken critic of the government.” It’s a lot to unpack, but it begins, not by coincidence, with something he tweeted in 2018 that earned him a large SEC fine:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
At the time, Tesla was trading for close to $370. Musk’s tweet drew the normal comments from his flock of followers (“$420 is a reference to #420 … GENIUS,” “Make it $420.69 please”), but also snitch-taggers who immediately replied with @SEC_Enforcement’s handle. The deal Musk teased obviously never materialized, but it caused Tesla’s share price to waffle.
A short while later, the SEC accused him of making “false and misleading” statements about plans to take Tesla private, and sued him and Tesla. Ultimately, Musk paid a $20 million fine and stepped down as Tesla chairman for three years. Tesla also had to pay a $20 million fine, and agree to monitor and vet all of Musk’s public statements, regardless which the medium.
Hop forward to today, and Musk and Tesla are now claiming the SEC has used this deal the three of them struck—officially, a consent decree—as a sort of ploy to “chill” Musk’s free speech. Several times since the settlement was reached in 2019, the SEC has told Tesla and Musk that he is violating the deal, usually through something new that he’s tweeted.
Today’s complaint says they believed that when they settled the SEC’s charges, it would allow a court, not the securities watchdog, to monitor compliance. “But the SEC has broken its promises,” it argues, claiming that the agency has been “weaponizing the consent decree by using it to try to muzzle and harass Mr. Musk and Tesla.”
We’ve reached out to Tesla and the SEC for comment and will update this post if we hear back.
Additionally, the filing alleges that the SEC hasn’t paid shareholders any of the $40 million it “purports to be holding for them,” but seized back in 2018. “Instead, it has been devoting its formidable resources to endless, unfounded investigations into Mr. Musk and Tesla,” the complaint says. It argues the SEC “has yet to announce anything like a distribution plan” despite allegedly sitting on the money for over 1,200 days. Legally, the SEC is supposed to do this within 60 days. “As such,” the filing goes on to say, “the SEC has taken nearly twenty times longer than its specified outer limit.”
In the document, Musk and Tesla are seeking a hearing on the matter with the U.S. District Court for the Southern District of New York.