Tesla shareholders lose bid for 'gag order' against Elon Musk

NEW YORK - Elon Musk will not be subjected to a "gag order" preventing him from discussing a lawsuit claiming he defrauded Tesla shareholders by tweeting in 2018 about taking his electric car company private, a federal judge ruled on Wednesday (April 20).

US District Judge Edward Chen in San Francisco agreed with Mr Musk and Tesla that the proposed temporary restraining order appeared overbroad because it prevented Mr Musk from speaking to "anyone" about the case.

Mr Chen also found no proof that letting Mr Musk, the world's richest person according to Forbes, talk publicly posed a "clear and present danger" or "serious and imminent threat" to a trial.

But the judge also said he plans to tell jurors at the scheduled January 2023 trial he had already ruled that Mr Musk's tweets were false, and made with sufficient knowledge they were false.

Shareholders sued over losses resulting from volatility in Tesla's shares after Mr Musk tweeted on Aug 7, 2018, that he had "funding secured" to potentially take Tesla private at US$420 (S$573) per share, and that "investor support is confirmed."

Nicholas Porritt, a lawyer for the shareholders, in an email said he was pleased that jurors will be instructed that the tweets "were false and were made fraudulently by Elon Musk." He said the primary remaining issue is the amount of damages owed.

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The April 15 request for a gag order came one day after Mr Musk told the Technology, Entertainment, Design (TED) conference in Vancouver that he had lined up funding to privatize Tesla, but the US Securities and Exchange Commission sued him for fraud anyway over his tweeting.

Mr Musk and Tesla said the proposed gag order "evokes a level of censorship" that could not be reconciled with the US Constitution's guarantee of free speech.

They also said an order could block Mr Musk from communicating with Tesla shareholders, discussing his proposal to buy Twitter Inc, and trying to end his consent decree with the SEC, which requires Tesla lawyers to vet some of his tweets.

Mr Musk has said he would never lie to shareholders. He has offered to buy Twitter for US$43 billion or US$54.20 per share.