Elon Musk’s request to have a 2018 consent decree with the Securities and Exchange Commission thrown out was denied by a U.S. District Judge on Wednesday. U.S. District Judge Lewis Liman said the agreement will be upheld because Musk entered the terms of the decree “knowingly and willingly.”
The decree was a set of terms applied to Musk after the two parties agreed to settle fraud charges stemming from the CEO’s 2018 “funding secured” Twitter saga. Musk, who purchased Twitter earlier this week for a cool $44 billion, was required to step down as Tesla’s Chairman while also having his communications monitored by a committee of independent directors. Musk and Tesla were both required to pay $20 million in fines each.
Musk recently stated that he only agreed to the consent decree’s terms in 2018 because it was necessary to keep Tesla alive. “I was told by the banks that if I chose not to settle with the SEC, the banks would cease providing working capital, and Tesla would go bankrupt immediately. That’s like having a gun to your child’s head,” Musk said during a recent interview with TED.
In a courtroom in March, Musk filed his initial request to have the decree thrown out. Musk and his attorneys argued the decree “trampled” his “First Amendment rights and to impose prior restraints on his speech.” However, Judge Liman disagreed and stated that because Musk entered the agreement, he has to deal with the terms.
“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 specter of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not,” Judge Liman said, according to Reuters.
Additionally, Judge Liman denied Musk’s request to terminate the SEC’s subpoena to Musk and Tesla, which aimed to determine whether Musk’s poll from November 6, which asked Twitter followers whether he should sell 10 percent of his Tesla holdings, was vetted before it was published.
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