Elon Musk Ordered To Testify In SEC Twitter Takeover Probe

The US Securities and Exchange Commission (SEC) has ordered Elon Musk to testify once again over his $44 billion purchase of Twitter (now known as X), after the billionaire had refused a previous subpoena last year.

Elon Musk has for years continued a public feud with the SEC, and matters only worsened in October last year, when US regulator sued to compel Musk to testify, after he had failed to testify on 15 September 2023.

The whole issue stems from when the SEC in May 2022 started looking into Musk’s disclosure of his initial stake in Twitter, questioning whether he filed the appropriate paperwork. The regulator is also looking into whether Musk’s statements in relation to buying the platform were accurate.

Twitter purchase

This was because Musk had first acquired a 5 percent stake in Twitter in March 2022, but he made a late disclosure in April 2022, when he surprised the markets by revealing he had increased his shareholding to 9.2 percent.

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

Musk then accepted an offer of a seat on Twitter’s board of directors, but just days before he was due to join the board, he suddenly declined.

Musk then officially announced his takeover offer for Twitter and signed a deal, agreeing to purchase the firm for $54.20 per share.

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

September refusal

The SEC investigation continued throughout the drama of Musk’s chaotic acquisition of the platform in late October 2022, and his controversial actions following that takeover.

The regulator in 2023 noted that Musk had testified twice as part of the SEC’s investigation in July 2022, and had produced “hundreds of documents” to federal investigators.

But the court filing last year revealed that the SEC had served Musk in May 2023 with a subpoena to testify again in the matter. That subpoena sought evidence and testimony from Musk that the SEC said at the time that it does not yet possess.

Musk had agreed to testify on 15 September 2023 at the SEC office in San Francisco, but in an extraordinary move, Musk “abruptly notified the SEC” two days before his scheduled appearance to say he would not attend.

Musk alleged that the US regulators had leaked information to the media. Musk’s team also argued the investigation was frivolous, and it said document requests as well as demand for testimony again in the face of an investigation “arising from the accidental tardiness of a clerical filing” was troubling government action.

The SEC attempted to negotiate with Musk to conduct the deposition in Texas in October or November, but it was alleged that Musk had a “blanket refusal to appear for testimony.”

Court order

Now Elon Musk has been ordered to testify again as part of the SEC investigation, the Guardian newspaper reported.

A California federal court ruling released on Saturday gave the Tesla and SpaceX CEO a week to agree with the regulator on a date and place for the interview.

According to the court order, US magistrate judge Laurel Beeler said the parties had initially agreed to a date “but ultimately the respondent (Musk) did not appear and resists the subpoena on the grounds that the SEC’s investigation is baseless and harassing and seeks irrelevant information”.

According to the Guardian, Judge Beeler in forcing an interview, rejected that argument and said regulators had authority to issue the subpoena for relevant information.

If the SEC and Musk cannot agree on a date and time for the interview, Judge Beeler said she would hear from both sides and decide for them.

Public feud

Musk’s feud with the SEC stems from August 2018, when Musk surprised the markets, when he tweeted that he was considering taking Tesla private and he had secured funding to do so.

After the privatisation never materialise, the SEC sought to ban Elon Musk from acting as an officer or director of a publicly traded company.

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 and he has petitioned the US supreme court to review the agreement, alleging it violates his right to free speech.

Musk has not helped 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.

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