Elon Musk Doesn’t Have to Keep Quiet About Tesla Shareholder Lawsuit – CNET

Elon Musk

Musk is being sued by Tesla shareholders over alleged securities fraud related tweets he made about taking the company private.

James Martin/CNET

Elon Musk managed to avoid a temporary restraining order that would have barred him from publicly discussing a lawsuit against him by Tesla shareholders until after the upcoming trial — but it wasn’t all good news for Musk.

A federal judge on Wednesday denied the motion, saying the plaintiff’s request for a restraining order was “overbroad” and, despite publicity leading up to the trial, Musk’s comments are unlikely to prevent the court from securing unbiased jurors. 

In a response filed Wednesday to the proposed restraining order, Musk attorney Alex Spiro argued that it would “trample” Musk’s right to free speech. “It’s a great day for free speech,” Spiro said in an emailed statement.

Musk is being sued by Tesla shareholders over alleged securities fraud for a 2018 tweet where he claimed to have secured funding to take the electric vehicle company private at $420 per share. The group alleges the statements were false and misleading, a point the judge agrees with.

Judge Edward M. Chen on Friday said the jury will be told that the court has “has already found that the August 2018 tweets were false and made with the requisite scienter,” meaning he knew the statements were false. 

The main point still to be determined at the trial, which has been rescheduled for January 2023, will be the how much Musk has to pay to the class of Tesla investors, according to Nicholas Porritt, an attorney for the plaintiffs. 

In the request for the restraining order, attorneys for the plaintiffs made specific reference to Musk’s comments at Ted 2022 last week in which he criticized financial regulators at the Securities and Exchange Commission. He also went on to reiterate that “funding was indeed secured.”

“Musk’s comments and his flagrant disregard of the opinions of the SEC, this court, and his own written consent, strongly suggest that Musk is likely to continue making similar statements up to trial,” read the motion for the restraining order. Chen, however, said Musk’s comments were consistent with public positions he has already taken during litigation and didn’t meet the bar for a restraining order. 

In September 2018, the SEC sued Musk for securities fraud over making misleading statements. The settlement entailed that Musk and Tesla each had to pay $20 million in fines and that his tweets would have to be preapproved if it contained information that could likely affect Tesla’s share price. The SEC later argued that Tesla had failed to oversee Musk’s tweets, according to a report from The Wall Street Journal. Musk and his lawyers are now asking a court to end the 2018 settlement, saying it’s untenable and part of a “harassment campaign” to limit the CEO’s free speech. 

Musk also caused a stir last week when he said he would buy Twitter for $54.20 a share, valuing the social network at $43 billion. Musk has said he wants to make Twitter a bastion of free speech. Twitter has been criticized for how it moderates content, but the First Amendment applies to government censoring speech, not companies. 

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