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Biden administration urges US Supreme Court to reject Musk’s appeal in SEC litigation

WASHINGTON: President Joe Biden’s administration on Friday urged the US Supreme Court to dismiss billionaire businessman Elon Musk’s dispute with the Securities and Exchange Commission.

In December, Musk asked the justices to appeal after a lower court upheld his consent judgment with the SEC after he posted on Twitter, now called X, in 2018 that he had “obtained funding” to take his electric car company Tesla. private. The SEC accused Musk of defrauding investors.

Musk’s agreement was part of an agreement with the SEC under which he and Tesla each paid a $20 million fine. Musk relinquished his role as Tesla chairman and agreed to let a Tesla lawyer approve certain Twitter posts. Musk purchased the social media platform in 2022 and renamed it.

Musk called the consent decree “muzzling” his constitutional right to free speech.

The Justice Department said in its filing that “the terms of the settlement herein were reasonably designed to minimize the likelihood that Petitioner (Musk) will make false or misleading statements in the future in violation of the securities laws.”

A three-judge panel of the Manhattan-based 2nd U.S. Circuit of Appeals rejected Musk’s claim that the SEC exploited the executive order to conduct harassment investigations into his use of Twitter.

In its decision, the 2nd Circuit ruled that Musk could not review the Twitter posts on the grounds that he had “changed his mind.” In July 2023, the 2nd Circuit denied Musk’s request to rehear the case.

Musk’s lawyers said the SEC had no right to impose, as a condition of a settlement, a “gag rule” that they said violated the U.S. Constitution’s First Amendment constraints on government limits on free speech. In their December court filing, Musk’s lawyers told judges that allowing the SEC to require Musk to obtain pre-approval for certain social media posts gave the agency “intolerable power.”

In a separate Musk-related lawsuit, the New Orleans-based 5th U.S. Circuit Court of Appeals agreed to reconsider its March ruling that Musk violated federal labor law by posting on Twitter in May 2018 that Tesla employees would lose their stock options if they joined Musk. a syndicate. The 5th Circuit heard arguments in the case in January.

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