The U.S. Securities and Exchange Commission (SEC) announced on Friday its intention to seek sanctions against Elon Musk.
The U.S. Securities and Exchange Commission (SEC) announced on Friday its intention to seek sanctions against Elon Musk after he failed to appear for court-ordered testimony in an investigation into the company’s $44 billion acquisition of Twitter Inc. The development was detailed in documents filed in San Francisco federal court.
In its motion, the SEC seeks to secure an order compelling Musk to explain why he should not be held in civil contempt for notifying the SEC that he would not be appearing at his scheduled testimony on September 10 just three hours before the event.
Musk’s previous promises
On the day he missed his testimony, Musk was overseeing the launch of SpaceX’s Polaris Dawn mission in Cape Canaveral, Florida. But the SEC alleges that Musk, SpaceX’s chief technology officer, likely knew about the plan for much longer, given that discussions about the launch had taken place two days earlier. The SEC alleges that Musk’s actions violated a May 31 court order requiring him to testify.
“Musk’s excuses themselves reek of maneuvering,” said SEC attorney Robin Andrews. “The court must make it clear that Musk’s maneuvering and delay tactics must end.”
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Response from Musk’s legal team
In response to the SEC’s complaint, Alex Spiro, one of Musk’s lawyers, called the proposed sanctions “extreme” and unjust. Spiro argued that Musk’s absence was necessary for the safety of the astronauts involved in the SpaceX launch, and said Musk’s testimony had been rescheduled for October 3.
Spiro argued that Musk’s inability to attend was due to an “emergency situation” beyond his control, and that he has “no reason to believe such an emergency will occur again.”
SEC investigation ongoing
The SEC’s investigation is centered on whether Musk violated securities laws when he began buying up Twitter shares in early 2022. Critics, including Twitter shareholders, have accused Musk of delaying disclosing his purchase beyond the 10-day deadline required for investors to own 5% of a publicly traded company. Musk eventually disclosed he owned 9.2% of Twitter and then offered to buy the entire company.
Musk acknowledged in July that he had misunderstood SEC disclosure requirements, and argued that “all indications” showed his delay was a “mistake.”
Historic tensions with the SEC
This isn’t Musk’s first run-in with the SEC. Last October, the agency sued him after he missed a scheduled interview at his San Francisco office. Musk has described the SEC’s actions as subpoena harassment, but it stems from a long-running feud that included a 2018 lawsuit over his tweets about taking Tesla private. Musk settled the case by paying a $20 million fine and agreeing to have Tesla lawyers review his tweets before posting them.
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