On Friday, the U.S. Securities and Exchange Commission (SEC) announced its intention to pursue sanctions against Elon Musk following his failure to provide court-ordered testimony in connection with the agency’s investigation into his $44 billion acquisition of Twitter.
In a filing submitted to a federal court in San Francisco, the SEC sought a motion to show cause why Musk should not be held in civil contempt. This motion follows his late notification—just three hours before his scheduled testimony on September 10—that he would not attend.
On the day of the testimony, Musk traveled to Cape Canaveral, Florida, to oversee the launch of SpaceX’s Polaris Dawn mission. Musk, already a prominent figure as the CEO of both electric vehicle manufacturer Tesla and aerospace company SpaceX, is regarded as the wealthiest person in the world.
The SEC contended that Musk, serving as SpaceX’s chief technical officer, was likely aware of the mission launch due to discussions held within the company just two days prior. They argued that Musk’s decision to prioritize the launch over his testimony constituted a violation of a court order issued on May 31, compelling him to testify.
“Musk’s excuse itself smacks of gamesmanship,” asserted SEC attorney Robin Andrews, urging the court to ensure that Musk’s delay tactics are put to a stop.
In response, Musk’s attorney, Alex Spiro, characterized the potential sanctions as “drastic” and unwarranted. He emphasized that Musk’s absence from the launch was crucial for the safety of astronauts, noting that his testimony has already been rescheduled for October 3.
Spiro further claimed that Musk’s failure to testify was due to an “emergency” beyond his control and suggested that there was no indication such an emergency would occur again.
The SEC, while declining to comment directly, expressed concerns in their court filing that Musk might similarly miss the rescheduled date.
The investigation by the SEC aims to determine if Musk breached securities laws when he began accumulating Twitter shares in early 2022. Musk faced criticism from Twitter shareholders for not disclosing his intentions sooner, as investors are required to announce any holdings surpassing 5% of a public company. He eventually revealed a 9.2% stake in Twitter and subsequently made an offer to acquire the entire company.
During a discussion in July, Musk stated he misunderstood SEC rules regarding disclosures and claimed that indications supported the notion that his delay was merely a mistake. In October of the previous year, the SEC filed a lawsuit against him after he failed to appear for a scheduled interview at their San Francisco office.
Musk has previously expressed his views that the SEC is attempting to “harass” him through subpoenas, reflecting long-standing tensions stemming from a 2018 lawsuit related to his Twitter statements about taking Tesla private. This lawsuit concluded with Musk paying a $20 million settlement and agreeing to have his social media posts pre-reviewed by Tesla attorneys in exchange for stepping down as the company’s chairman.
© Thomson Reuters 2024
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