SEC wants court to force Elon Musk to testify in Twitter investigation.
The SEC Seeks Court Order to Compel Elon Musk’s Testimony in Twitter Acquisition Probe
The Securities and Exchange Commission (SEC) announced on Thursday that it has taken legal action to require Tesla CEO Elon Musk to testify in an ongoing investigation regarding his $44 billion acquisition of Twitter last year.
The SEC stated in its filing on October 5th that Musk failed to appear for testimony on September 15th, despite previously agreeing to do so. The investigative subpoena required him to appear at the SEC’s regional office in San Francisco.
The investigation focuses on potential violations related to Musk’s stock purchases in Twitter, which he renamed X after the acquisition, as well as his statements and SEC filings associated with the purchase last year.
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The SEC revealed that Musk did not raise any objections to the subpoena when it was initially served or in the following months. However, just two days before his scheduled testimony, Musk abruptly informed SEC staff that he would not appear.
“Musk attempted to justify his refusal to comply with the subpoena by raising, for the first time, several spurious objections, including an objection to San Francisco as an appropriate testimony location,” the regulator said.
One of Musk’s objections was that he believed the SEC was using its subpoena power to harass him. He also claimed that his legal counsel needed time to review relevant material from his recently published biography, according to the SEC.
The SEC offered to hold Musk’s testimony at any of its offices, including one in Fort Worth, Texas, which is closest to his current residence, and proposed potential dates in October and November. However, on September 24th, Musk’s counsel informed the SEC that he would not appear for testimony at any location.
The SEC sent a letter to Musk’s counsel, requesting a response by September 29th if Musk had reconsidered and would agree to testify. However, no response was received.
The SEC emphasized that it had followed all necessary administrative procedures to obtain Musk’s testimony, but his blatant refusal to comply with the investigative subpoena necessitated court intervention.
“Musk’s ongoing refusal to comply with the SEC’s administrative subpoena is hindering and delaying the SEC staff’s investigation to determine whether violations of the federal securities laws have occurred,” the SEC stated.
“Accordingly, the SEC now asks the Court to compel Musk to appear for investigative testimony,” it added.
Musk’s attorney, Alex Spiro, argued that the ”SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation—enough is enough.”
Musk, who is also the CEO of SpaceX, successfully completed his $44 billion acquisition of Twitter and took it private in October 2022 after a lengthy legal battle with the social media company’s previous leadership.
Following Musk’s agreement to acquire Twitter in April 2022, he attempted to back out, leading the company to sue him to enforce the acquisition.
The SEC initiated an investigation in April 2022 to determine if any securities laws were violated in relation to Musk’s Twitter stock purchases, statements, and SEC filings.
What is the purpose of the SEC seeking a court order to compel Musk’s testimony?
Ived by the deadline.
As a result of Musk’s refusal to testify, the SEC has now sought a court order to compel his testimony. The regulator is seeking the order from the U.S. District Court for the Northern District of California, stating that it is necessary to ensure the integrity of its investigation into potential violations.
The SEC’s filing emphasizes the importance of Musk’s testimony in shedding light on his stock purchases in Twitter, now known as X, and the statements and filings made in relation to the acquisition. The regulator aims to determine whether there were any violations of securities laws or market manipulation in connection with the transaction.
This legal action is the latest development in the ongoing scrutiny of Musk’s business activities. Earlier this year, Musk faced criticism and legal action for his tweets about Tesla’s stock, which led to allegations of market manipulation. Musk eventually settled with the SEC, agreeing to step down as Tesla’s chairman and pay a $20 million fine.
These recent events involving Musk and his acquisition of Twitter have raised concerns among investors and the public. The SEC’s investigation aims to bring clarity to the situation and ensure that all parties involved comply with securities laws and regulations.
If the court grants the SEC’s request for a court order, Musk will be compelled to testify in the investigation. Failure to comply with a court order could result in serious consequences for Musk, including fines and potential legal action.
Overall, the SEC’s pursuit of a court order to compel Musk’s testimony demonstrates the regulator’s commitment to conducting a thorough and transparent investigation into potential securities violations. It also serves as a reminder to corporate leaders that they are not above the law, and that their actions and statements can have serious legal consequences.
Investors and the public will be closely watching the outcome of this legal battle, as it may have implications not only for Musk and Tesla, but also for the broader business community. The SEC’s actions against Musk will likely be seen as a signal that regulators will not tolerate any potential misconduct in the corporate world.
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