Elon Musk could face sanctions as SEC probes Twitter acquisition
Date: 2024-09-23 Author: Henry Casey Categories: BUSINESS
Elon Musk is under intense scrutiny as the U.S. Securities and Exchange Commission (SEC) looks to impose sanctions after he failed to appear at a court hearing related to his $44 billion acquisition of Twitter.
The regulator announced on Friday that it would seek sanctions against Musk after he canceled a scheduled deposition just three hours before it was scheduled to take place on Sept. 10, Reuters reported.
The SEC said in a filing in federal court in San Francisco that it will seek an order requiring Musk to explain why he should not be held civilly liable for failing to appear.
Musk Violates Court Order by Late-Minute Withdrawal from Testifying
The SEC argues that Musk’s decision to not appear at the hearing at the last minute violates a May 31 court order requiring him to testify.
On the day of his failed testimony, Musk, who leads Tesla and SpaceX, was at Cape Canaveral in Florida to oversee the launch of SpaceX’s Polaris Dawn mission.
Even though Musk is SpaceX’s chief technology officer, the SEC argues that he should have known about the planned launch in advance, given the company’s internal discussions two days earlier.
SEC attorney Robin Andrews accused Musk of “gameplay” and urged the court to stop the tactics.
“Musk’s excuse itself appears to be part of the game,” Andrews wrote in a filing. “The court should make clear that Musk’s delay tactics must stop.”
Alex Spiro, Musk’s attorney, called the SEC’s actions “drastic” and unnecessary.
He said Musk’s presence was important for the safety of the astronauts on the mission, and that the testimony had already been rescheduled for October 3.
Spiro said the failure to appear was due to an “emergency” and there was no reason to believe it would happen again.
The SEC declined to comment further on the case, but said in a statement that there was no guarantee Musk would appear at the rescheduled October 3 hearing.
SEC Investigating Musk
The investigation focuses on whether Musk violated securities laws by failing to promptly disclose his initial purchase of Twitter shares in early 2022.
Investors are required to disclose if they own 5% of a public company’s stock under the rules.
Musk delayed disclosing his 9.2% stake in Twitter, leading to allegations of misleading shareholders.
He claims the delay was due to a misunderstanding of disclosure requirements and calls it a “mistake.”
This is not Musk’s first run-in with the SEC.
In 2018, he settled a lawsuit over tweets about taking Tesla private, agreeing to pay a $20 million fine and step down as chairman of the company.
Meanwhile, the SEC has faced growing criticism for its approach to regulating the crypto industry through lawsuits.
Critics argue that the SEC has failed to develop a clear regulatory framework for cryptocurrencies, instead choosing to pursue key industry players in court.
As previously reported, a coalition of seven US states has united to challenge the SEC’s regulation of cryptocurrency.
