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Tesla CEO Elon Musk, via his attorney, accused the Securities and Exchange Commission of leaking information about a federal investigation in order to retaliate against him for public criticism of the federal financial regulators.
In a letter on Monday to U.S. District Judge Alison Nathan, Musk attorney Alex Spiro wrote: “It has become clearer and clearer that the Commission is out to retaliate against my clients for exercising their First Amendment rights—most recently by criticizing the Commission on the public docket and by petitioning this Court for relief.”
The letter comes four days after Musk initially alleged that the SEC was engaged in harassment by continually investigating him, that the agency was trying to chill his right to free speech, and had neglected their duties to remit $40 million to shareholders that Tesla and Musk previously paid in fines to settle securities fraud charges.
Spiro did not specify which investigation or what type of information may have been leaked by the SEC, and to whom. In the letter, he alleged that at least one member of the SEC had leaked “certain information regarding its investigation” without providing any supporting evidence.
Spiro could not be immediately reached for comment. The SEC did not immediately respond for comment.
The conflict between Musk and the SEC began in September 2018 when the SEC charged Musk with making “false and misleading” statements to investors after he wrote on Twitter that August that he had secured enough funding for a massive private buyout of Tesla at $420 a share. The stock seesawed all month and the deal Musk alluded to never materialized.
Musk and Tesla had to pay $20 million in fines each, and Musk was forced to step down as chairman for at least three years as part of a revised settlement agreement the agency reached with the automaker and CEO in 2019. Tesla also had to put in place a system for monitoring Musk’s statements to the public about the company — whether on Twitter, in a blog post or any other medium.
The SEC’s Steven Buchholz replied to the earlier allegations on Friday, saying the agency was actually making progress on the task of disbursing the $40 million to shareholders. He characterized the task as complex and noted that Tesla and Musk had never expressed any concern about remittance before. SEC staff expects to submit a “proposed plan of distribution” to the court for approval by the end of March 2022, he wrote.
Buchholz also wrote that ongoing communication with Tesla was what Nathan and the revised settlement agreement had called for, and that if Musk objected to any subpoena his attorneys should address that in a different motion. There’s a different federal statutory scheme for objecting to a subpoena.
Tesla disclosed in a 2021 fourth-quarter earnings report that the SEC issued a subpoena to the company in November 2021. According to Tesla’s quarterly filing, the agency is seeking information on its “governance processes around compliance with the SEC settlement, as amended.”
Spiro revealed in the letter on Monday some details about that subpoena. He wrote, “the Commission specifically demanded documents concerning my clients’ ‘compliance or non-compliance with Tesla’s disclosure controls and procedures, executive communications policy, external communications policy, other policies or procedures relating to public statements or communications by Tesla executives, or the final judgment or amended final judgment in SEC v. Musk, 1:18-cv-8865-AJN (S.D.N.Y.).’
He also said the SEC issued a separate, but similar subpoena to Musk.
The November subpoena came shortly after Musk polled his tens of millions of Twitter followers in asking if he should sell 10% of his stake in Tesla. They voted yes. But a major portion of the sales that followed the Twitter poll were part of a plan that Musk adopted in September 2021.