Elon Musk’s spat with the Securities and Exchange Commission is heating up, with the company accusing the SEC of “leaking” information from a federal inquiry in retaliation for his public criticisms.
The allegation is contained in a new letter from Musk’s lawyer, Alex Spiro, to US District Judge Alison Nathan, who oversaw the settlement between Elon Musk and the SEC over Musk’s “funding secured” tweet in 2018, which put him in prison for securities fraud. It was Musk’s third letter to the US government in two weeks, and it shows no signs of letting up.
Elon Musk accuses the SEC of leaking information about a federal investigation into his securities fraud case. Spiro writes:
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. Upon information and belief, after I filed the February 17, 2022 letter to this Court regarding the Commission’s conduct, at least one member of the SEC staff responded by leaking certain information regarding its investigation. This leak is emblematic of the vindictive, improper conduct that occasioned my letter: the SEC is retaliating against Mr. Musk and Tesla, without answering to the constraints of principle or law in so doing.
Spiro goes on to tell Nathan that Musk’s legal team has “referred the situation” to the SEC’s inspector general and that SEC personnel should “preserve their documents and devices.” According to him, he also wants an “on-the-record assurance that the Commission has not disclosed investigative details in violation of its own rules and practices, and is otherwise acting in compliance with the law.”
To be sure, Spiro doesn’t present any proof to back up his assertion of information being leaked. The SEC’s representative declined to comment on Musk’s latest letter.
For the past three years, Tesla has been dogged by the infamous “funding secured” tweet. The SEC initiated an inquiry after Musk sent the tweet, eventually concluding that Musk had deceived investors about his plan to take Tesla private.
Tesla and the SEC agreed a year later that Musk’s tweets about Tesla should be monitored more closely. According to the agreement, Musk’s tweets about Tesla’s financial health, sales, or delivery numbers—projected or otherwise—as well as other specified issues will be pre-approved by a corporate lawyer.
Musk claimed the SEC was trying an “unconstitutional power grab,” and the agency claimed Musk was in “blatant violation” of the settlement agreement. A federal judge eventually ordered the two parties to work things out.
However, tensions rose this month when it was disclosed that the Securities and Exchange Commission had subpoenaed Tesla late last year over Musk’s remarks. Musk accused the SEC of subjecting him and his company to “endless, unjustified investigations” and claimed the agency was failing to follow through on its promise to disburse $40 million in fine money to Tesla shareholders as part of a 2018 settlement. The SEC reacted by saying it was still working on a plan to distribute the money.
