SEC sues Elon Musk to force his testimony in Twitter takeover probe
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Elon Musk in Washington, D.C., in September 2023. Photo: Nathan Howard/Getty Images
The Securities and Exchange Commission asked a federal court to order Elon Musk to testify as part of the agency's investigation into whether he violated federal securities laws during last year's Twitter purchase.
Why it matters: The SEC said in a filing on Thursday that Musk and the agency both agreed that he would sit for testimony in September 2023 but he failed to appear.
Context: The agency is specifically attempting to determine if he violated the law by disclosing a 9.2% position in Twitter after he was legally required to do so.
- Those who buy 5% or more of a publicly traded company must legally disclose that ownership within 10 days of acquisition.
- The SEC is also investigating why Musk, 21 days after the deadline, disclosed it using a form with fewer reporting requirements than a Schedule 13D, the one required for any holder that intends to exert control with its stake.
What they're saying: The SEC said Musk's counsel objected to a subpoena for the testimony only two days before the agreed upon date.
- The SEC first filed the subpoena months before in May 2023, giving his lawyers ample time to raise objections.
- The agency said none of his objections have "any legal validity," meaning he "has no justifiable excuse for his non-compliance with the SEC's subpoena."
The big picture: Musk and the SEC have had a long and tumultuous relationship that particularly soured after the agency sued him in 2018 for claiming he had "funding secured" to take Tesla private at $420 per share.
- They settled the lawsuit later that year, with Musk agreeing to pay $20 million, step down as Tesla chair and to restrict his communications related to Tesla.
- However, Musk has for years attempted to scrap the settlement, claiming the agency violated his right to free speech.
What's next: The SEC requested the court to hold a hearing over the order on Nov. 9.
Read the SEC's application, via DocumentCloud:
Go deeper: Musk says X will charge everyone to use the platform
Editor's note: This story has been updated with new details throughout.
