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Musk Escalates Fight with Regulators

His lawyer is accusing regulators of leaking information.

Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition March 9, 2020, in Washington.
Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition March 9, 2020, in Washington.
AP Photo/Susan Walsh, File

DETROIT (AP) — Elon Musk and his lawyers are escalating their fight with U.S. securities regulators, with a lawyer accusing them of leaking investigative information, and the Tesla CEO alleging on Twitter that government corruption is being exposed.

Musk's tweet early Tuesday and a Monday letter from Musk lawyer Alex Spiro to a federal judge didn't offer any specifics about the leak, but the actions ramped up a war of words with the Securities and Exchange Commission.

The agency isn't the only federal regulator that Musk is sparring with. The National Highway Traffic Safety Administration recently has stepped up enforcement against Tesla. Last week, Musk called the agency the “fun police” for making Tesla recall a “Boombox” function that can play sounds over an external speaker and obscure audible warnings for pedestrians.

The safety agency has launched multiple investigations of Tesla and is overseeing 15 Tesla recalls since January of 2021. Recalls include “Full Self-Driving” software being programmed to run stop signs at slow speeds. Investigations include unexpected braking by Tesla vehicles.

On Monday, Spiro filed another letter with the U.S. District Judge Alison Nathan in Manhattan accusing at least one SEC staff member of leaking information about an investigation of Musk and Tesla's compliance with a court order aimed at controlling his tweets.

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

Tuesday morning, Musk tweeted that the allegations are “just peeling back the first layer of the corruption onion. Stay tuned.” No details were given.

The SEC declined comment Tuesday, and messages were left seeking details about the leak allegations from Tesla and Spiro.

The SEC spat goes back 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 at $420 per share. The funding was far from secured and the company remains public. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as approval of Musk’s tweets.

After Spiro filed a letter with the court accusing the SEC of harassing Musk, the SEC responded with a letter saying it was following Nathan's instructions in trying to speak with Musk's lawyers about his posts on Twitter.

In a letter dated Friday, Steven Buchholz of the SEC's San Francisco office wrote that the judge encouraged both sides to confer before raising issues with the court.

He also denied that the agency had issued subpoenas in the Musk Twitter case and denied Spiro's allegation that the SEC is taking too long to distribute a $40 million penalty from Musk and Tesla that is supposed to go to Tesla shareholders.

Spiro sent a letter on Thursday accusing the SEC of harassing Musk with investigations and subpoenas over his Twitter posts.

And in further regulatory news involving Tesla, the Environmental Protection Agency said Tuesday it had reached a settlement with the electric car maker over Clean Air Act violations at its plant in Fremont, California. Tesla agreed to pay a $275,000 penalty for violations from October 2016 through September 2019 at the plant's vehicle coating operations, the EPA said.

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