Judge stays out of Elon Musk vs. SEC letter spat, for now

A federal judge is refusing to get involved in a spat between a lawyer for Tesla CEO Elon Musk and U.S. securities regulators, at least for now

Elon Musk-SEC (Copyright 2020 The Associated Press. All rights reserved.)

A federal judge is refusing to get involved in a letter-writing spat between one of Tesla CEO Elon Musk's lawyers and U.S. securities regulators, at least for now.

In an order issued Thursday, District Judge Alison Nathan in Manhattan denied two requests from Musk attorney Alex Spiro and told him he could file motions and legal briefs if he wanted to pursue the matters.

The fight began on Feb. 17 when Spiro sent a letter to Nathan accusing the Securities and Exchange Commission of trying to muzzle Musk because he's an outspoken government critic. Spiro also accused the commission of harassing Musk with subpoenas and investigations over his Twitter posts.

The spat dates to 2018, when Musk and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the money to take the company private. The funding was far from secured and the company remains public. The settlement specified governance changes at Tesla, including Musk’s ouster as board chairman, as well as approval of Musk’s tweets.

Spiro questioned why the SEC has yet to distribute the fine money to shareholders and requested a court conference on the issue. Nathan denied the request and wrote in the order that Spiro could file a motion and legal brief. The judge noted there is no deadline to distribute the money.

She also wrote that if Musk has a “non frivolous basis” to cancel a subpoena, he can file motions seeking action from the court.

Spiro also accused an unidentified SEC staffer of leaking investigation details and asked for an “on-the-record” assurance that the SEC has not done so. Nathan also denied this.

“The letter does not contain specific facts or legal authority to justify this request,” she wrote. She also doubted that the request is enforceable by the court.

Musk tweeted earlier this week that the allegations are “just peeling back the first layer of the corruption onion. Stay tuned.” No details were given. The SEC has declined to comment.

“It has become clearer and clearer that the commission is out to retaliate against my clients for exercising their First Amendment rights,” Spiro wrote in one of his letters to the court.

The SEC responded that it was following Nathan’s instructions in trying to speak with Musk’s lawyers about his posts on Twitter.

It also denied that the agency had issued subpoenas in the Musk Twitter case and said the SEC is in the process of distributing the fine money.