SEC may sanction Musk over missed testimony in X investigation
The Securities and Exchange Commission (SEC) is preparing to impose sanctions on Elon Musk, following his failure to attend a court-ordered testimony. The testimony was part of the SEC's investigation into Musk's $44 billion acquisition of Twitter (now X). This information was revealed in a recent filing by the SEC in a San Francisco federal court.
SEC accuses Musk of contempt
The SEC has accused Musk of potential civil contempt, for informing the court just three hours before his scheduled testimony on September 10, that he would not be attending. Instead of appearing in court, Musk, who is also the founder of Tesla and SpaceX, traveled to Florida's Cape Canaveral to supervise a SpaceX mission launch.
Actions violated court order
The SEC has claimed that Musk, as SpaceX's Chief Technical Officer, must have been aware of the launch scheduled for that day. The agency argues this knowledge contradicts Musk's reason for missing his testimony. "Musk's excuse itself smacks of gamesmanship," SEC lawyer Robin Andrews wrote in the filing. "The court must make clear that Musk's gamesmanship and delay tactics must cease."
Musk's lawyer defends his absence, reschedules testimony
Alex Spiro, Musk's attorney, has described the proposed sanctions as "drastic" and unnecessary. He argued that Musk's absence from the launch could have put astronauts' lives at risk. Spiro also revealed that a new date for Musk's testimony has been set for October 3. He attributed Musk's failure to testify on September 10 to an "emergency" beyond his control and "there is no reason to believe such an emergency will reoccur."
Investigation focuses on Musk's Twitter stock accumulation
The SEC is investigating whether Musk violated securities laws in early 2022, when he began acquiring Twitter stock. The agency had offered to reschedule Musk's hearing to September 11, but this was declined by his attorney who agreed only to October dates. This probe has led to criticism from Twitter shareholders who claim that Musk delayed disclosing his purchase of shares by at least 10 days.
Musk admits misunderstanding disclosure requirements
In July, Musk admitted that he had misunderstood the SEC's disclosure requirements. He described his delay in disclosing his Twitter stake as a "mistake." The SEC initiated legal action last October after Musk missed a scheduled interview at its San Francisco office. Despite this, Musk has accused the SEC of trying to "harass" him through subpoenas and has had previous disputes with the agency.
SEC seeks 'meaningful conditional relief' if Musk misses October hearing
The SEC has stated that it will seek "meaningful conditional relief" if Musk fails to appear in court in October. The agency also indicated its intention to file a sanctions motion against Musk, to recover its travel expenses for the canceled testimony and other relief. This is not the first time Musk has faced scrutiny from the SEC, with previous investigations related to Tesla shares and claims about Tesla vehicles' "full self-driving" capabilities.
