Elon Musk escalates his argument with the Securities and Exchange Commission, accusing the agency of “leaking” information from a federal investigation in retaliation against him for his public criticism.
The allegation is contained in a new letter from Musk’s attorney Alex Spiro to U.S. District Judge Alison Nathan, who oversaw the settlement between Musk and the SEC over his 2018 “funding secured” tweet accusing him of securities fraud. It was the third letter in the past two weeks in a back and forth between Musk and the US government that shows little sign of abating.
In the most recent letter, Musk accuses the SEC of leaking information about a federal investigation into his securities fraud case. Spiro writes (emphasis ours):
It has become increasingly apparent that the Commission is out to retaliate against my clients for exercising their First Amendment rights — most recently by criticizing the Commission in the public records and applying to the Court for to file for waiver. Upon information and conviction, after I filed the February 17, 2022 letter to this court regarding the Commission’s conduct, at least one member of SEC staff responded by leaking certain information about its investigation. This leak is symbolic of the vindictive, inappropriate behavior that prompted my letter: The SEC is retaliating against Mr. Musk and Tesla, regardless of the limitations of the principle or the law.
Spiro asks SEC staff to “keep their data and devices” and informs Nathan that Musk’s legal team has “reported the matter” to the agency’s inspector general. He also states that he is seeking “on-the-record assurance that the Commission has not leaked investigation details that violate its own rules and policies, and is otherwise acting in accordance with the law.”
To be sure, Spiro does not provide any evidence to support his claim of leaked information. An SEC spokesperson declined to comment on Musk’s most recent letter.
The infamous “funding secured” tweet has loomed over Tesla for the past three years. After Musk sent out the tweet, the SEC launched an investigation, ultimately concluding that Musk had misled investors about his plan to take Tesla private.
A year later, Tesla and the SEC agreed that Musk’s tweets about Tesla should be subject to increased scrutiny. Under the settlement, a corporate attorney was assigned to pre-approve Musk’s tweets about Tesla’s financial health, sales or delivery figures — estimated or not — as well as other specific topics.
But that hardly resolved the dispute. In February 2019, the SEC asked a federal judge to disparage Musk for sending an inaccurate tweet, arguing it violated the terms of the agreement. (Musk tweeted Tesla was set to make “about” 500,000 Model 3s this year, which appeared to conflict with the company’s official guidelines to deliver a total of 360,000 to 400,000 cars in 2019)
Musk claimed the SEC was attempting an “unconstitutional coup” and the agency said the Tesla CEO committed a “blatant violation” of the settlement. Ultimately, the two sides were ordered by a federal judge to work the cases out.
But tensions escalated this month when it became known that the SEC had sued Tesla late last year over Musk’s tweets. Musk accused the SEC of subjecting him and his company to “endless, baseless investigations” and alleging that the agency ignored its commitment to pay out $40 million in fines to Tesla shareholders, according to the 2018 settlement. it was still developing a plan to allocate the funds.