A federal judge on Wednesday denied Tesla Inc. Chief Executive Elon Musk’s request to end a 2018 agreement with the U.S. Securities and Exchange Commission that required his Tesla-related tweets to be reviewed and preapproved.
The decision follows Musk’s $44 billion bid for Twitter Inc.
which the social-media company’s board accepted on Monday.
Musk last month asked the courts to end the SEC oversight, claiming it infringed on his First Amendment rights, and to block SEC subpoenas sent in November. Both were denied.
The dispute stems from Musk’s now famous “going private” tweet in August 2018, in which Musk told his millions of followers he had “funding secured” to take Tesla
private for $420 a share, then a substantial premium over the stock’s trading price.
U.S. District Judge Lewis Liman in Manhattan sided with the SEC Wednesday, saying in a written opinion that Musk’s contention that the regulators have used the consent decree to harass him and to launch investigations of his speech is “meritless, and, in this case, particularly ironic.”
Moreover, Liman wrote, it was “unsurprising” that the SEC would have some questions after Musk tweeted in November a poll on whether he should sell 10% of his Tesla stake.
“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 he had not,” the judge wrote.
Musk has cobbled together funding for the Twitter deal, in part by putting up $21 billion in equity commitments.
That is likely to result in some part of Musk’s stake being sold over the next few months, or being held as collateral, which has pressured Tesla shares this week.
Tesla stock has lost 14% so far this year, which compares with losses of around 12% for the S&P 500 index
in the same period.
Twitter, meanwhile, was down 2.2% at $48.59, below Musk’s $54.20 offer price, suggesting the market sees risk that the deal might fall apart.