Elon Musk Faces Possible Penalties as SEC Investigates Twitter Acquisition
Elon Musk is currently being investigated by the U.S. Securities and Exchange Commission (SEC) for his acquisition of Twitter, which amounted to $44 billion. As a result of Musk’s failure to attend a court-ordered deposition related to the acquisition, the SEC is seeking to impose sanctions against him.
On Friday, the regulatory body announced its intention to pursue sanctions after Musk canceled his scheduled testimony just three hours before it was supposed to take place on September 10, according to Reuters.
In a filing with a San Francisco federal court, the SEC stated that it would request an order requiring Musk to explain why he should not be held in civil contempt for failing to appear.
The SEC argues that Musk’s last-minute decision to skip the deposition violated a court order from May 31 that compelled his testimony.
Musk, who is the head of Tesla and SpaceX, was in Florida’s Cape Canaveral on the day of the missed testimony to oversee the launch of SpaceX’s Polaris Dawn mission. Despite his role as SpaceX’s chief technical officer, the SEC contends that Musk would have been aware of the planned launch well in advance, as there were internal discussions about it two days prior.
Robin Andrews, the regulator’s lawyer, accused Musk of engaging in “gamesmanship” and urged the court to put an end to such tactics.
“Musk’s excuse itself smacks of gamesmanship,” Andrews wrote in the filing. “The court must make it clear that Musk’s delay tactics must stop.”
Musk’s attorney, Alex Spiro, described the SEC’s actions as “drastic” and unnecessary. He argued that Musk’s presence was crucial for the safety of the astronauts involved in the mission and that the testimony had already been rescheduled for October 3. Spiro maintained that the failure to testify was due to an “emergency” and there is no indication that it would happen again.
The SEC has chosen not to provide any further comments on the case but noted in its filing that there is no guarantee that Musk will appear for the rescheduled testimony on October 3.
The SEC’s investigation focuses on whether Musk violated securities laws by not disclosing his initial accumulation of Twitter stock in early 2022 in a timely manner. According to securities regulations, investors must disclose when they own 5% of a public company. Musk delayed disclosing his 9.2% stake in Twitter, leading to accusations of misleading shareholders. He has since claimed that the delay was a misunderstanding of the disclosure requirements and referred to it as a “mistake.”
This is not the first time Musk has clashed with the SEC. In 2018, he settled a lawsuit related to tweets about taking Tesla private by agreeing to pay a $20 million fine and stepping down as Tesla’s chairman.
Meanwhile, the SEC has been facing criticism for its approach to the cryptocurrency industry, which some view as “regulation-by-enforcement.” Critics argue that the SEC has failed to establish a clear regulatory framework for cryptocurrencies and has instead chosen to pursue legal action against key players in the industry.
As previously reported, a coalition of seven U.S. states has come together to challenge the SEC’s regulation of cryptocurrency.
Follow us on Google News
