The Tesla chief had decided to have his own agreement with securities regulators terminated, but a federal judge in New York rejected that request Wednesday, just two days after Twitter’s board of directors approved Musk’s $44 billion offer. to buy the company. Mr. Musk’s deal requires him to get approval for his social media posts about Tesla — the charges were related to tweets he posted saying he had received funding to take Tesla private — and prohibits him from pursuing the case. discuss.
Same argument for both sides: ‘Strong, vibrant markets’
The SEC’s gag order has been in place since 1972. The practice, which allows settling suspects not to admit or deny wrongdoing provided they never speak publicly about the matter, is designed to help the SEC market monitor more efficiently.
The rationale is that if each defendant opted out of trial but later reformulated the charges to the public, it would undermine the validity of resolutions and the legitimacy of Wall Street’s key regulators, experts say. “It makes everything look like a sham,” said Harvey Pitt, a former bureau chairman who has little sympathy for retractors. “It’s inappropriate for someone who doesn’t admit that they then violate a gag order. They have a way out – refuse to settle.”
Post-settlement denials also suggest that nothing actually happened, potentially downplaying the risks surrounding a person or entity for investors. For suspects, being silent about a case can be an invaluable protection. That’s a choice suspects can make, said Alma Angotti, a former enforcement attorney with the SEC and the Treasury Department, “It’s a voluntary exemption.”
But the executives in the amicus brief argue that the choice is not actually a choice. They say that most cases are eventually resolved because it is too expensive to fight the SEC. Mr. Musk has said he has reached a settlement because a lawsuit would have put Tesla under excessive financial pressure and jeopardized funding.
And banning discussions of the matters, the briefing notes, effectively goes against the SEC’s mission to protect investors, and instead leaves them in the dark about material information. The executives then cite former SEC chairman Arthur Levitt, who said in a 1999 speech that “quality information is the lifeblood of strong, vibrant markets.” The group argues that the SEC should be “barred from discouraging full, frank, public discussion,” ensuring this vibrancy.
Next Stop: A Supreme Court Review?
Mr. Musk calls himself a “free speech absolutist” and says he believes in the unbridled flow of information within the law, as the amicus letter he added to the Supreme Court argues.
