The United States Securities and Exchange Commission (SEC) has sued Elon Musk for failing to appear for testimony over his $44 billion purchase of Twitter, now rebranded as X Corp., last year. The multi-billionaire was scheduled to testify before the SEC on September 15 but he didn’t comply, a Thursday court filing states. The Commission has requested the District Court for the Northern District of California to compel Musk to testify.
The SEC seeks the court’s help to make Elon Musk testify in the Twitter probe
This SEC investigation dates back to March 2022 when Musk’s stake in Twitter crossed five percent (the social media company was traded publicly at the time). The US securities law requires investors to notify the SEC when their stake in a company surpasses this threshold. However, Musk delayed this filing by ten days. In the meantime, he continued to purchase more Twitter shares.
This lag allowed him to save millions of dollars (an estimated $156 million), as he could buy Twitter’s stock at a lower price. Had he reported the purchase on time, the company’s share prices would have gone up (which did happen after his delayed disclosure), making him pay more for further purchases. The SEC subsequently launched a probe into the matter and served Musk with a subpoena in June 2022, seeking his testimony.
The Tesla CEO appeared for half-day sessions of testimony before the SEC by videoconference twice in July 2022. The Commission wasn’t fully satisfied, though. It claims to have received thousands of new documents surrounding the matter from various parties following Musk’s appearances, with Musk himself submitting many. It wanted to hear more from the multi-billionaire, who went on to fully purchase Twitter in October.
The two parties eventually agreed on a September 14, 2023, date for the testimony. Two weeks before that, Musk asked the SEC to push the testimony by a day, to which it agreed. However, on September 13, he told the Commission that he would not appear for testimony. Musk raised several objections, including an unfavorable location in San Francisco. The SEC promptly addressed his stated objections but he still failed to appear.
Musk alleged that the Commission harassed him
After Musk failed to appear for testimony on the scheduled date, the SEC proposed new dates in October and November. The Commission also allowed him to pick a location of his choice. However, he said that he would not appear for testimony in any location. The SEC reached out to him several times asking if he had changed his mind, only to get a denial.
Meanwhile, Musk alleged that the Commission harassed him, adding that his counsel needed more time to review relevant material. After failing to make him appear for testimony over his purchase of Twitter, the SEC is now seeking the court’s help. It remains to be seen whether it works. The legal filing from the Commission reveals that a hearing on the matter will take place on November 9.
2023-10-06 15:06:18