The US SEC has taken legal action against Elon Musk for his refusal to participate in an ongoing investigation related to his acquisition of Twitter. This move is part of a broader inquiry into Musk's actions and statements concerning his stock purchases and the disclosures he made about them during that time.
(Photo : MANDEL NGAN/AFP via Getty Images)
X (formerly Twitter) CEO Elon Musk leaves a US Senate bipartisan Artificial Intelligence (AI) Insight Forum at the US Capitol in Washington, DC, on September 13, 2023.
Scrutinizing Musk
Elon Musk once again finds himself under the scrutiny of the Securities and Exchange Commission (SEC). The regulatory body, which has been looking into Musk's Twitter activities, has escalated matters by filing a lawsuit against the CEO of X after he failed to attend a previously scheduled testimony.
Engadget reported that SEC's investigation traces its origins back to 2022 when it initiated a probe into Musk's belated disclosure of his ownership stake in Twitter, which was a publicly-traded company at the time.
Musk missed the deadline by ten days for filing the required paperwork, a violation of US securities law that may have resulted in him gaining as much as $156 million. Additionally, this delay led to Musk becoming the subject of a class-action lawsuit filed by former Twitter shareholders.
The SEC has filed a complaint, alleging that Elon Musk failed to honor a scheduled testimony on September 15th after being subpoenaed.
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Just two days before the planned testimony, Musk abruptly informed the SEC staff of his non-attendance, citing several objections, including the location of the testimony in San Francisco, as inappropriate.
SEC further states that it proposed alternative arrangements for the testimony in Fort Worth, Texas, which is closer to Musk's residence, and offered multiple dates in October and November. Despite these attempts to accommodate Musk, he steadfastly refused to participate in the testimony.
As a result, Wall Street Journal reported the SEC has taken legal action to compel Musk's testimony. The regulatory body is currently seeking legal action in a San Francisco federal court to compel Musk to adhere to its subpoena.
Previous Instances
The subpoena is connected to an SEC investigation that is not yet public. This investigation focuses on whether Elon Musk violated securities regulations concerning his Twitter stock acquisitions in 2022 and his statements and filings related to the company during the same year.
In April of the previous year, The Verge reported that the SEC had communicated with Musk, raising inquiries regarding his disclosures concerning these stock purchases.
This isn't the first instance where Elon Musk has found himself at odds with the SEC, an agency he's frequently mocked over the years. In a well-known incident from 2018, the Tesla CEO faced securities fraud charges for a tweet in which he claimed to have "funding secured" to take Tesla private.
Ultimately, Musk reached a settlement with the SEC, paying a $20 million penalty and relinquishing his role as Tesla's board chairman. However, Musk continues to contest one aspect of that SEC settlement, specifically the requirement for a "Twitter-sitter" to approve certain Tesla-related tweets he posts.
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