Lawyers for Musk and Tesla say the US Securities and Exchange Commission seems to be targeting both because Musk is a ‘critic of the government’.
By Bloomberg
Published On 17 Feb 2022
Lawyers for Elon Musk and Tesla Inc. told a judge the U.S. Securities and Exchange Commission is “targeting” the two and has failed to pay Tesla shareholders $40 million it collected in a settlement of a 2018 case over his tweets.
In a letter filed with the federal court in Manhattan Thursday, Musk’s legal team claims the SEC “seems to be targeting Mr. Musk and Tesla” because he remains “an outspoken critic of the government.” The agency is trying to “chill” his speech with “endless, unfounded” investigations, his lawyers allege.
A federal judge has also raised questions about the status of a $40 million fund established from fines paid for Musk’s controversial tweets, seeking accounting statements in a December order.
The firm appointed in May to administer distributions from the fund, set up by the SEC for harmed investors, hasn’t filed required accounting statements, U.S. District Judge Alison Nathan said in a December order. The SEC reached a settlement with Musk and Tesla in September 2018 after suing the billionaire over his tweeted claims weeks earlier that he had the funding and investor support to buy out stockholders at $420 a share.
The SEC alleged the tweets were false, and while Musk and Tesla didn’t admit to wrongdoing as part of the accord, the agency set up a so-called Fair Fund to repay investors harmed by Musk’s statements.
In the letter Thursday, Alex Spiro, one of the lawyers representing Musk and Tesla in the case, asks Nathan for a hearing “to address why the SEC has failed to distribute these funds to shareholders but has chosen to spend its energy and resources investigating Mr. Musk’s and Tesla’s compliance with the consent decree by issuing subpoenas unilaterally, without court approval.”
Spiro claims the SEC is using the 2018 settlement to “muzzle and harass” Musk and the company while ignoring its responsibility to distribute the $40 million to shareholders.
The consulting company handling the fund has said it is awaiting transfer of the money from the SEC.
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