Elon Musk is being forced to testify as part of an inquiry into his purchase of Twitter, now known as X, according to the Securities and Exchange Commission, which announced its request for a court order on Thursday.
Although Musk had been served with an investigative subpoena by the SEC and had not objected at the time it was served, the SEC claimed in a filing in a federal court in San Francisco that Musk failed to show up for testimony on September 15.
However, “two days before his scheduled testimony, Musk abruptly notified the SEC staff that he would not appear,” according to the agency’s complaint. For the first time, Musk raised a number of bogus defences to explain why he wouldn’t cooperate with the subpoena, including one that San Francisco wasn’t a proper place to hold the hearing.
San Francisco is the home of X.
Alex Spiro, Musk’s attorney, declared in an email statement on Thursday that “enough is enough” after the SEC “has already taken Mr. Musk’s testimony multiple times in this misguided investigation.”
The SEC claimed it has been conducting an inquiry into the facts surrounding the time preceding Musk’s takeover of Twitter last year, when the firm was still publicly listed. According to the agency, no one has been found to have broken any federal securities laws.
After a protracted legal dispute with Twitter’s former leadership, the Tesla CEO finalised his $44 billion deal to purchase the social media firm and take it private in October 2022.
Musk signed a contract to buy Twitter in April 2022, but when he tried to back out, the firm sued to make him complete the purchase.
The SEC announced that it has authorised an inquiry of Musk’s purchases of Twitter stock, as well as his remarks and SEC filings about the firm, to begin in April 2022.
The same month, Twitter stockholders in New York filed a complaint alleging that the billionaire had improperly delayed declaring his ownership of the social media business so he could purchase more shares at a discount.
A pension fund for Oklahoma firefighters filed the case, and the crux of it is whether Musk missed the SEC’s deadline for disclosing that he had amassed a holding of at least 5%. The lawsuit asserts that the delay caused harm to less wealthy investors who sold business shares in the roughly two weeks before Musk disclosed owning a significant stake.
In denying Musk’s request to have the case dismissed last week, U.S. District Judge Andrew Carter questioned claims that “Musk was somehow ‘too busy’ to comply with SEC disclosure rules about his ownership stake in Twitter, while simultaneously buying millions of shares of Twitter stock, tweeting about the state of Twitter as a social media platform, and meeting with several Twitter executives and insiders.” Carter, though, didn’t a claim that the activities amounted to insider trading should be removed from the case.
The SEC said in a court filing on Thursday that Musk has no reason to refuse to cooperate with the SEC’s probe because the agency is in charge of safeguarding investors and has broad investigative powers.
Musk, according to the SEC, objected to giving a testimony in San Francisco since he doesn’t reside there. As a result, the commission claimed it offered to hold the hearing at any of its 11 locations, including one in Fort Worth, Texas, which is closer to Musk’s residence. According to the SEC, Musk’s attorneys reacted on September 24 by stating that Musk will not show up for testimony anywhere.
Additionally, Musk objected to testifying on the grounds that his attorneys required time to study new evidence that may have been included in a biography of him by Walter Isaacson that was released on September 12. According to the complaint, however, the publishing of the book is “not a legitimate basis” for Musk to evade a court order, and in any case, Musk’s first defiance of the summons has given his attorney ample time to analyse the biography for any pertinent details.