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Breakingviews: Elon Musk can’t buy his other “censorship” foe

NEW YORK, April 28 (Reuters Breakingviews) – Sometimes the US version of capitalism seems to work more or less as intended. Elon Musk, motivated in part by what he perceives as censorship by social media platform Twitter (TWTR.N), you have decided to buy the company read more for $44 billion. But the Tesla (TSLA.O) boss and world’s wealthiest person just failed to read more in his legal quest – also rooted in freedom of speech arguments – to get the US securities regulator off his back.

At Tesla, Musk operates under a 2018 settlement with the US Securities and Exchange Commission. Musk’s tweets and other material statements to the company have to be vetoed before he can post them. The multibillionaire finds such constraints frustrating; he calls himself a “free speech absolutist” and tweets liberally.

His lawyers had previously asked a federal judge in New York to terminate the so-called consent decree with the SEC, arguing among other things that the regulator’s behavior had “crossed the line into harassment.” Earlier this month Musk referred to the SEC as “those bastards.”

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In Wednesday’s ruling denying the request, Judge Lewis Liman did not mince his words. Musk – already exorbitantly wealthy – signed up to the consent decree voluntarily, Liman said, and can’t now claim 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.”

The ruling notes, in essence, that Americans choose to waive their First Amendment free speech rights all the time, including in legal settlements. Moreover, it’s a tenet of the disclosure-based US system of financial regulation that Musk and other corporate chieftains’ statements about their companies must be accurate, ensuring investors are not misled.

The same system allows anyone wealthy enough to buy a company, with shareholders’ approval, just as Musk has agreed to do with Twitter – assuming he follows through read more. Meanwhile, also on Wednesday, a Delaware court delivered a perhaps unintentional message about the impartiality of justice with a ruling in Musk’s favor in a shareholder lawsuit about Tesla’s 2016 purchase of SolarCity.

Billions in cash and Musk’s take-no-prisoners attitude led Twitter’s board to give in to his entreaties rapidly. Fortunately for regular investors, regulators and courts aren’t so easily persuaded.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

CONTEXT NEWS

– A US judge on April 27 criticized Elon Musk for trying to escape a settlement with regulators requiring pre-clearance by lawyers of tweets regarding Tesla, saying the company’s billionaire chief executive was “bemoaning” the 2018 deal now that he felt Tesla was “invincible .”

– The dispute stems from the claim by the US Securities and Exchange Commission that Musk defrauded Tesla investors on Aug. 7, 2018, by tweeting that he had “funding secured” to potentially take the electric-car company private when in fact a buyout was not close. Musk’s lawyers had sought to terminate the 2018 consent decree that resolved the SEC charges, arguing that the regulator’s pursuit of Musk “crossed the line into harassment” and impeded his constitutional right to free speech.

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Editing by Lauren Silva Laughlin, Sharon Lam and Pranav Kiran

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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