The Securities and Exchange Commission on Thursday asked a San Francisco federal court to order Elon Musk to comply with the agency’s ongoing investigation of his 2022 takeover of Twitter, the social-media platform he has since renamed X, The Wall Street Journal reported.
Musk was scheduled to provide testimony to the SEC on Sept. 15 but failed to appear at the agency’s San Francisco office, the agency’s filing says. The SEC later offered to allow Musk to testify closer to his home in Texas, but the agency’s efforts “were met with Musk’s blanket refusal to appear for testimony,” the SEC wrote.
The agency is probing Musk’s purchase of Twitter stock and his disclosures of his investment in the company, the filing says. The Wall Street Journal reported in May 2022 that the securities regulators were investigating Musk’s late disclosure of his stake.
According to The Wall Street Journal, Musk responded to the SEC’s move Thursday. “A comprehensive overhaul of these agencies is sorely needed, along with a commission to take punitive action against those individuals who have abused their regulatory power for personal and political gain,” he wrote. “Can’t wait for this to happen.”
The U.S.Securities And Exchange Commission posted a Litigation Release titled: “Elon R. Musk”. From the release:
SEC Files Subpoena Enforcement Action Against Elon R. Musk Seeking an Order Compelling his Attendance for investigative Testimony
The Securities and Exchange Commission (“SEC”) announced the that it has filed an application seeking an order directing Elon Musk (“Musk”) to comply with an investigative enforcement action calling for his appearance for testimony, which Musk failed to comply.
If a person or entity refuses to comply with a subpoena issued by SEC enforcement staff pursuant to a formal order of investigation, the Commission may file a subpoena enforcement action in federal district court seeking an order compelling compliance.
According to the SEC staff’s filing in the U.S. District Court for the Northern District of California, the testimony subpoena to Musk relates to an ongoing investigation by the SEC regarding, among other things, potential violations of various provisions of the federal securities laws in connection with (a) Musk’s 2022 purchases of Twitter, Inc. (“Twitter”) stock, and (b) Musk’s 2022statements and SEC filings relating to Twitter. According to the filing, the SEC seeks Musk’s testimony to obtain information not already in the SEC’s possession that is relevant to its legitimate and lawful investigation.
According to the filing, Musk failed to appear for testimony as required by the investigative subpoena served by the SEC, despite: (1) agreeing to appear for testimony in a mutually agreed upon date in September 2023; (2) having been served with a subpoena in May 2023 requiring his appearance for testimony in the SEC’s San Francisco Regional Office on that mutually agreed upon date; (3) raising no objection to the subpoena from May 2023 until two days before his scheduled testimony date in September 2023, when Musk notified the SEC that he would not appear. According to the filing, Musk attempted to justify his refusal to comply with the subpoena by raising, for the first time, several spurious objections.
The SEC staff’s application seeks an order from the court directing Musk to comply with the subpoena. The application is subject to the courts’s ruling. The SEC staff is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.
In my opinion, the SEC is being serious about Musk appearing for testimony regarding the potential violations the SEC wrote about. It does not seem to me that Musk is interested in talking to the SEC at all. This could potentially pose some legal trouble for Musk.