(Reuters) — A federal appeals court on Monday rejected Elon Musk’s bid to change or end his 2018 securities fraud settlement with the U.S. Securities and Exchange Commission that required a Tesla Inc. lawyer to approve some of his tweets in advance.
The 2nd U.S. Circuit Court of Appeals in Manhattan rejected Musk’s claim that the SEC exploited his consent decree to conduct bad faith, harassing investigations that violated his freedom of speech under the U.S. Constitution.
Musk’s decree resolved an SEC lawsuit that accused him of defrauding investors with an August 7, 2018 tweet that he had “secured financing” to take his electric car company private.
It required the pre-screening of tweets that may contain material information about Tesla. Musk and Tesla also paid $20 million in civil fines each, and Musk gave up his role as chairman.
In the appeal, Musk̵7;s lawyers called the pre-approval mandate a “government-imposed gag” that amounted to an illegal prior restriction on his speech.
But the three-judge appeals court panel said the SEC had opened only two subsequent investigations into Musk’s tweets, and that those tweets “likely violated” the terms of the decree.
The panel said the SEC’s “limited, appropriate inquiries in this case have not made compliance with the consent decree “substantially more burdensome” on Mr. Musk, as he had argued.