Elon Musk Issued Summons By SEC Over Failure To Disclose Twitter Stake

The American financial regulator, the US Securities and Exchange Commission (SEC), continues its legal action against Elon Musk, even as he guts various federal agencies.

CNBC, citing a filing on Thursday, reported that Elon Musk received a court summons last week in connection with the SEC’s lawsuit over his alleged failure to properly disclose his ownership of Twitter stock in a timely manner in early 2022, before buying the social media site.

It stems from when Musk had first acquired a 5 percent stake in Twitter in March 2022, but he then made a late disclosure in April 2022 when he surprised observers by revealing he had increased his shareholding to 9.2 percent.

At the time Musk had denied he was intending an acquisition or takeover of Twitter.

Twitter purchase

Musk then accepted an offer of a seat on Twitter’s board, but just days before joining the board, he suddenly declined.

In April 2022 Musk then made his takeover offer for Twitter and signed a deal, agreeing to purchase the firm for $54.20 per share.

Multiple lawsuits were filed against Musk in 2022, from disgruntled shareholders who alleged Musk had carried out stock market manipulation.

SEC investigation

The SEC in May 2022 had begun looking into Musk’s disclosure of his stake in Twitter, questioning whether he had filed the appropriate paperwork.

Then in October 2023 the SEC sued Musk to compel him to testify over his Twitter purchase, after he had failed to do so on 15 September 2023.

A federal court in May 2024 ordered Musk to testify in court after the Tesla and SpaceX chief executive had refused to attend an interview for the probe.

In September 2024 the SEC warned that it intended to sanction Musk, after the billionaire failed to appear for testimony ordered by the court for the SEC’s probe into Musk’s $44 billion (£33bn) takeover of Twitter, now named X.

In October 2024 representatives of Musk declined to say whether he had attended an interview with the SEC, after cancelling at short notice a previous appointment mandated by a federal court.

Musk summons

Now CNBC has reported that Elon Musk received a court summons last week in connection with the SEC’s lawsuit

A process server reportedly delivered the civil summons to Musk on 14 March at the headquarters of SpaceX in Brownsville, Texas, the filing said.

The server noted that upon his arrival at the SpaceX facility, three different security guards refused to accept the documents, and one told him he was trespassing. The server reportedly “placed the documents on the ground,” and left while the guards photographed him and his car.

Prior to Twitter’s acquisition, Musk had built up a position in the company of greater than 5 percent, which would have required disclosing his holdings to the public within 10 calendar days of reaching that threshold.

According to the SEC’s civil complaint, filed in US District Court in Washington, DC, in January, Musk was more than 10 days late in reporting that material information, “allowing him to underpay by at least $150 million for shares he purchased after his financial beneficial ownership report was due.”

Once he took over Twitter, Musk used the platform to promote then-candidate and now President Donald Trump, and he now serves within the Trump administration as a top advisor to the president.

An answer from Musk, or his attorneys, is due on 4 April.

The SEC, Elon Musk, and Quinn Emanuel Partner Alex Spiro, his lawyer, didn’t immediately respond to requests for comment, CNBC noted.

Bad blood

The bad blood between Musk and the SEC stems from August 2018, when Musk had surprised the markets, when he tweeted that he was considering taking Tesla private and he had secured funding to do so.

After that ‘privatisation’ never materialised, the SEC sought to ban Elon Musk from acting as an officer or director of a publicly traded company as a result,

In the end, the US financial regulator forced Musk to step down as chairman of Tesla and pay $20m in penalties.

In addition, Tesla itself also had to pay a $20 million penalty.

Musk however was allowed to retain the Tesla CEO role and have his subsequent tweets about Telsa vetted by a company lawyer – a process that he has allegedly broken on multiple occasions.

Musk did not help his corner after he continued to insult the SEC over the years.

In October 2018 for example Musk tweeted that the US agency was the “shortseller enrichment commission.”

Then in December 2018 Musk publicly admitted that he had “no respect” for the SEC. Worse was to come in July 2020 when Musk tweeted this insult.

The message was widely read as having a vulgar meaning and comprising a major insult to the federal agency.