Feb 12, 2024 - Business

Court orders Musk to testify in SEC Twitter takeover probe

Elon Musk speaking in Krakow in January 2024.

Elon Musk speaking in Krakow in January 2024. Photo: Beata Zawrzel/NurPhoto via Getty Images

A federal judge ordered Elon Musk to comply with a Securities and Exchange Commission (SEC) subpoena and testify as part of the agency's investigation into whether he violated federal securities laws when he purchased Twitter in 2022.

The big picture: The order, which is a blow to Musk, will likely only intensify his long and tumultuous relationship with the SEC.

  • Musk for months attempted to stave off giving testimony by claiming the SEC didn't have authority to issue the subpoena and characterizing its investigation as "baseless" and "harassing."
  • U.S. Magistrate Judge Laurel Beeler on Saturday rejected Musk's claims, ruling that the SEC did have the authority, that his testimony is relevant to the investigation and that giving a testimony would not be unduly burdensome for him.

Catch up fast: The SEC is attempting to determine if Musk violated the law by breaking a legal deadline for disclosing his 9.2% position in Twitter, now known as X.

  • 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 his position 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.

  • The agency said Musk had agreed to sit for testimony in September but he failed to appear.
  • He has sat for testimony twice in the investigation in July 2022. But since those interviews, the SEC obtained thousands of new documents and has additional questions for Musk.

Context: The SEC separately sued Musk in 2018 for claiming on Twitter that he had "funding secured" to take Tesla private at $420 per share. The company's stock spiked on Musk's tweet, but then sank after his proposal came to nothing and he backtracked on it.

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