Elon Musk attunes to many names, but being unwittingly dubbed the controversial CEO is a year fresh. In the proverbial spotlight once again, Elon Musk is under SEC investigation. The SEC is suing Musk by focusing on whether he may have inadvertently violated federal securities laws during the audacious $44 billion acquisition of social media giant Twitter in October 2022. Yet it is believed that it is not to cast any negative aspersions on him.
SEC Sues Musk: Is Elon Musk Going To Testify?
The SEC investigation revolves around Musk’s stock purchase of Twitter, which he subsequently rebranded as “X,” along with the statements and SEC filings he made in connection with the acquisition.
Back in March 2022, Musk acquired a 9.2 percent stake in Twitter, effectively becoming its majority shareholder. However, the disclosure of this purchase did not appear in an SEC filing until the following month, which led to some shareholder litigation, though this was later dismissed.
Musk turned down a board seat at Twitter as it would have forced him to give up on acquiring more Twitter stock. Facing the prospect of a trial that aimed to enforce his commitment to complete the Twitter acquisition after he alleged that the platform wasn’t disclosing the full extent of bot activity, Musk ultimately executed the $44 billion transaction in October 2022, thus taking control of the company.
Fast forward to the present, the SEC’s latest move in this ongoing saga came to light when they filed a lawsuit to compel Musk to testify in their investigation. The reason being that Musk had initially agreed to cooperate to testify but subsequently reneged on it. The SEC had subpoenaed Musk in May 2023, initially securing his agreement to testify last month at the SEC’s San Francisco office on September 15, 2023.
However, just two days before his scheduled appearance, Musk raised several ‘spurious’ objections, which the SEC considered questionable. Among these objections was his claim that the SEC was attempting to harass him, and he cited the need for his legal team to review material from a recently published biography about him.
Believe what you see, not what you’re told
— Elon Musk (@elonmusk) October 3, 2023
Musk also refuted the SEC’s investigation proposals to conduct a deposition in Texas in October or November.
In response, Alex Spiro, an attorney for Musk stated, “The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation – enough is enough.”
A Musk-SEC Feud: Why SEC Needs Elon Musk To Testify
The SEC’s pursuit of Musk’s testimony is aimed at gathering additional information that they believe is crucial for their legitimate and lawful investigation.
This legal development underscores the persistent tension between Musk and the SEC, a feud that originated with Musk’s 2018 tweet announcing his intention to take Tesla private with secured funding. This tweet resulted in a $20 million fine for misleading investors and his subsequent resignation as chairman of the company.
In his recent statement, Musk suggested that a comprehensive overhaul of regulatory agencies is needed, along with the establishment of a commission to address individuals who have misused their regulatory power for personal and political gains.
This lawsuit adds to Musk’s growing list of legal challenges, including investigations related to Tesla’s self-driving claims and corporate perks, as well as claims related to vehicle driving range. Musk’s refusal to appear for the September testimony is indeed unusual in the corporate world, especially for a senior executive with positions in publicly traded companies.
