On Thursday, the U.S. Securities and Exchange Commission (SEC) took legal action against Elon Musk, aiming to enforce his testimony regarding his acquisition of Twitter in the previous year. Legal representatives from the SEC asserted in a court filing, made public in the Northern District of California, that Musk did not comply with a subpoena that mandated his appearance for testimony on September 15. The SEC claims that this subpoena was served to the Tesla CEO back in May 2023.
In a general sense, the SEC has indicated that their investigation is linked to potential securities fraud during the acquisition of Twitter shares last year, concurrent with Musk’s purchase of the company’s stock. Musk successfully completed the acquisition of Twitter, which is now known as X, in October, and the deal amounted to approximately $44 billion. The attorneys stated, “Musk’s ongoing refusal to cooperate with the SEC’s administrative subpoena is impeding and slowing down the SEC staff’s efforts to ascertain if any breaches of federal securities laws have taken place.” Consequently, the SEC is now requesting the Court to compel Musk to participate in investigative testimony.
The SEC stated that it made several attempts to schedule a mutually convenient meeting with Musk, even extending the offer to meet at the SEC’s Fort Worth office, which is geographically close to Musk’s current residence in the Austin region. Various dates in October and November of this year were proposed as options. However, the lawsuit asserts that Musk consistently declined these invitations for testimony, despite the SEC’s genuine efforts to facilitate the process.
Alex Spiro, who serves as Elon Musk’s attorney, commented on the matter by stating, “The SEC has already obtained Mr. Musk’s testimony on numerous occasions throughout this ill-conceived investigation—there comes a point when it should cease.” The SEC’s legal team contends that Musk declined to adhere to the subpoena, citing “several baseless objections,” including an objection to San Francisco as a suitable location for the testimony, despite having previously shown no objection to this location.
Furthermore, according to SEC attorneys, Musk held the belief that the commission was employing the subpoena as a means to “harass” him, which he used as a rationale for his refusal to cooperate. Musk also purportedly cited the recent release of his biography, authored by journalist Walter Isaacson, as another justification for his noncompliance, suggesting that the book might contain “new information that could be pertinent to this matter.”
In response, the attorneys stated in their legal filing, “The publication of Musk’s biography does not constitute a valid justification for him to evade compliance with a duly issued investigative subpoena. Moreover, Musk’s initial refusal to adhere to the subpoena has afforded his legal counsel ample time to review the biography for any pertinent information, rendering this objection moot and legally insufficient from the outset.”
The SEC, in a statement, clarified that its investigative team is still in the process of gathering facts and has not reached any conclusions regarding potential violations of federal securities laws by any specific individual or entity. As outlined in the legal filing, a hearing regarding this matter is set to occur on November 9.
