US SEC Plans Sanctions Against Elon Musk in Twitter Investigation

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 related to its investigation into his $44 billion acquisition of Twitter. This development was detailed in a filing made in federal court in San Francisco.

In its motion, the SEC aims to secure an order compelling Musk to explain why he should not be held in civil contempt for notifying the agency just three hours before his scheduled testimony on September 10 that he would not be attending.

Musk’s Prior Commitments

On the day of the missed testimony, Musk was in Cape Canaveral, Florida, overseeing the launch of SpaceX’s Polaris Dawn mission. However, the SEC contends that Musk, serving as SpaceX’s chief technical officer, was likely aware of this planned launch well in advance, given that discussions about it took place two days prior. The SEC claims Musk’s actions constitute a violation of a court order issued on May 31 that mandated his testimony.

“Musk’s excuse itself smacks of gamesmanship,” stated SEC lawyer Robin Andrews. “The court must make clear that Musk’s gamesmanship and delay tactics must cease.”

Response from Musk’s Legal Team

In response to the SEC’s allegations, Alex Spiro, one of Musk’s attorneys, described the proposed sanctions as “drastic” and unwarranted. Spiro argued that Musk’s absence was necessary for the safety of astronauts involved in the SpaceX launch, and he noted that Musk’s testimony has been rescheduled for October 3.

Spiro insisted that Musk’s failure to appear was due to an “emergency” beyond his control, asserting that “there is no reason to believe such an emergency will reoccur.”

Ongoing SEC Investigation

The SEC’s investigation centers on whether Musk violated securities laws when he began accumulating shares of Twitter in early 2022. Critics, including Twitter shareholders, have accused him of delaying disclosure of his stock purchases beyond the 10-day requirement for investors reaching a 5% ownership stake in public companies. Musk eventually revealed a 9.2% stake in Twitter and subsequently offered to acquire the entire company.

In July, Musk acknowledged a misunderstanding of SEC disclosure requirements, claiming that “all indications” pointed to his delay being a “mistake.”

Historical Tensions with the SEC

This isn’t the first time Musk has found himself at odds with the SEC. Last October, the agency filed a lawsuit after Musk missed a scheduled interview at its San Francisco office. Musk has described the SEC’s actions as harassment through subpoenas, stemming from a long-standing feud that includes a 2018 lawsuit over his Twitter posts about taking Tesla private. Musk settled that case by paying a $20 million fine and agreeing to have his tweets reviewed by Tesla lawyers before posting.

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