Elon Musk is appealing his settlement with the Securities and Exchange Commission for his "funding secured" tweet all the way to the US Supreme Court. Musk argues the settlement is being used to infringe on his First Amendment rights. Yahoo Finance Legal Reporter Alexis Keenan explains the case.

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Video Transcript

- Meanwhile, Elon Musk taking a legal battle to the Supreme Court. The billionaire CEO of Tesla appealing to the high court to terminate his settlement with the SEC regarding his 2018 tweets about taking Tesla private. Yahoo Finance's Alexis Keenan has the details. Alexis.

ALEXIS KEENAN: Hey, Josh. Yeah, a little bit of a trip down memory lane here. This is a petition by Elon Musk asking the Supreme Court to take up his dispute with the SEC over the settlement agreement that he reached with the Commission in 2018-- over that 2018 tweet, I should say, where he said he had funding secured to take Tesla private at $420 per share.

Now, this is all in an era before Musk bought the company in 2022 with his own $44 billion, plus some loans, where he was being charged with stock manipulation by the SEC. And to settle that problem, Musk said that he and Tesla would agree to $40 million in fines, also to step down from the board as chair.

But importantly, he agreed to have his statements, his tweets, his material tweets reviewed by somebody at the company before they go out. Now, Musk says the SEC and, therefore, the government is using this agreement to infringe on his First Amendment protected free speech. He also says that the conditions of this agreement go way too far.

In this petition, his lawyer calls the agreement an unconstitutional muzzle, he says, that chills Musk's speech through never ending threats of contempt, fines, or even imprisonment for otherwise protected speech. Now, since entering this accord, the SEC has asked Musk and the company for information three different times for information on tweets that he put out that they want to call, potentially, into question.

And so far, there are two lower courts that have both rejected his argument that this agreement is unconstitutional. You had in May a New York appellate court affirming a district court, a lower court's, ruling declining to undo this accord. But in February, really interesting, Musk won a California jury trial over that same very tweet.

The jury in that case said the tweet didn't amount to stock manipulation, and therefore, that freed Musk from any liability to shareholders. Now, the SEC is also investigating Musk over his 2022 purchase of Twitter. They sued him in October to try to ask whether or not the statements that he made in that arrangement were not on the up and up and that he may have manipulated stock in that instance.