US regulator sues Elon Musk, alleging he didn’t comply with federal subpoena to testify on 15 September in Twitter purchase investigation
The ongoing feud between Elon Musk and the US financial regulator has dramatically escalated this week, after the owner of X (aka Twitter) failed to comply with a federal subpoena last month.
A court filing on Thursday revealed that the US Securities and Exchange Commission (SEC) is now seeking a court order, after Elon Musk failed to testify on 15 September as part of the regulator’s investigation of his $44 billion purchase of Twitter, CNN reported.
The SEC had in May 2022 begun looking into Musk’s disclosure of his stake in Twitter, questioning whether he filed the appropriate paperwork.
This was because Musk had first acquired a 5 percent stake in Twitter in March 2022, but he made a late disclosure in April when he surprised observers by revealing he had increased his shareholding to 9.2 percent.
Musk denied at the time he was intending an acquisition or takeover of Twitter.
Musk then made his takeover offer for Twitter and signed a deal, agreeing to purchase the firm for $54.20 per share.
The SEC investigation continued throughout the drama and chaos of Musk’s acquisition of the platform in late October 2022, and his controversial actions following that takeover.
The regulator in its court filing this week noted that Musk had testified twice as part of the SEC’s investigation in July 2022, and had produced “hundreds of documents” to federal investigators.
But the court filing revealed that the SEC had served Musk in May 2023 with a subpoena to testify again in the matter. The current subpoena seeks evidence and testimony from Musk that the SEC does not yet possess, the agency said.
Musk agreed to testify on 15 September 2023 at the SEC San Francisco office, but in an extraordinary move, Musk “abruptly notified the SEC” two days before his scheduled appearance to say he would not be showing up.
The SEC then reportedly attempted to negotiate with Musk to conduct the deposition in Texas in October or November.
“These good faith efforts were met with Musk’s blanket refusal to appear for testimony,” the court filing states.
According to CNN, when Musk informed the SEC he would not be appearing to testify, his lawyer, Alex Spiro, wrote to the agency on 13 September, saying Musk had “already sat for testimony twice in this matter” and that “enough is enough.”
Spiro’s letter, which was included as an exhibit in the SEC’s court filings, accused regulators of seeking Musk’s testimony in bad faith and attempting to waste Musk’s time.
In addition, Spiro claimed that the recent release of Walter Isaacson’s biography of Musk would interfere because it contained “new information potentially relevant to this matter” that would take time for both sides to digest.
The SEC sought to ban Elon Musk from acting as an officer or director of a publicly traded company as a result, after the privatisation never materialised.
In the end, the US financial regulator forced Musk to step down as chairman of Tesla and pay $20m in penalties.
In addition, Tesla itself also had to pay a $20 million penalty.
Musk however was allowed to retain the Tesla CEO role and have his subsequent tweets about Telsa vetted by a company lawyer – a process that he has allegedly broken on multiple occasions and he continues to try and scrap that oversight.
In October 2018 for example Musk tweeted that the US agency was the “shortseller enrichment commission.”
Then in December 2018 Musk publicly admitted that he had “no respect” for the SEC. Worse was to come in July 2020 when Musk tweeted this.
SEC, three letter acronym, middle word is Elon’s
— Elon Musk (@elonmusk) July 2, 2020
The message was widely read as having a vulgar meaning and comprising a major insult to the agency.