SEC To Seek Sanctions After Musk Fails To Appear In Court

The US Securities and Exchange Commission (SEC) has said it intends to seek sanctions against Elon 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 renamed X.

In a court filing on Friday the SEC said its sanctions motion would seek an order to show cause for why Musk should not be held in civil contempt for waiting until three hours before the scheduled 10 September testimony to formally advise that he would not appear.

On the day the testimony was scheduled Musk travelled to Cape Canaveral in Florida to attend the launch of SpaceX’s Polaris Dawn mission.

Musk’s lawyers said the move for sanctions was “drastic” and unecessary and said Musk’s testimony had been rescheduled for 3 October.

Court testimony

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

Musk alleged the SEC was trying to “harass” him with a number of subpoenas.

Musk has for years maintained a public feud with the SEC, which worsened in October 2023 when the regulator sued to compel him to testify, after he had failed to do so on 15 September 2023.

The SEC in May 2022 began investigating 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.

Musk first acquired a 5 percent stake in Twitter in March 2022, but disclosed this only in April 2022, when he surprised the markets by revealing he had increased his shareholding to 9.2 percent.

Federal probe

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 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.

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.

Feud

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

Musk alleged at the time 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.