Tesla CEO Elon Musk's 'gag order' is rejected by a judge

According to Musk and Tesla, it "evokes a level of censorship" that cannot be reconciled with the United States Constitution's guarantee of free speech.

On Wednesday, a federal judge ruled that Elon Musk will not be subjected to a "gag order" preventing him from discussing a lawsuit alleging that he defrauded Tesla Inc shareholders by tweeting about abiding his electric car company private in 2018.

U.S. District Judge Edward Chen in San Francisco compromised with Musk also Tesla that the proposed temporary restraining order emerged overbroad because it prohibited Musk from discussing the case with "anyone."

However, the judge also stated that he intends to inform jurors at the scheduled January 2023 trial. He has already ruled that Musk's tweets were false and were made with sufficient knowledge that they were wrong.

Shareholders sued Tesla over losses caused by share volatility after Musk tweeted on Aug. 7, 2018, that he had "funding secured" to abiding Tesla private at $420 per share potentially and that "investor support is confirmed."

"In an email, Nicholas Porritt, a shareholder lawyer, said he was pleased that jurors will be advised that the tweets "were false and were made fraudulently by Elon Musk." However, he stated that the main issue is the number of damages owed.

The gag order request came one day after Musk told the TED conference in Vancouver that he had secured funding to privatize Tesla. Still, the U.S. Securities and Exchange Commission sued him for fraud because of his tweeting.

According to Musk and Tesla, it "evokes a level of censorship" that cannot be reconciled with the United States Constitution's guarantee of free speech.

They also stated that the order could prevent Musk from communicating with Tesla shareholders, discussing his proposed acquisition of Twitter Inc, and attempting to terminate his consent decree with the SEC, which demands Tesla lawyers to vet some of his tweets.

Musk has stated that he would never deceive shareholders. Nevertheless, he has made an offer to purchase Twitter for $54.20 per share. The subject is In re Tesla Inc Securities Litigation, No. 18-04865, in the United States District Court for the Northern District of California.