SEC Seeks Elon Musk’s Testimony in Twitter Purchase Investigation. The Securities and Exchange Commission (SEC) has announced its plan to request a judge to compel Elon Musk to testify as part of its investigation into the Twitter purchase, now known as X.
Musk’s Refusal to Testify
In a court filing in the San Francisco federal court, the SEC he disclosed that Musk did not testify on September 15 despite receiving an investigation subpoena from the SEC and failing to raise objections when served with the summons.
Objections and Concerns Raised
However, just two days before his scheduled testimony, Musk abruptly informed the SEC staff that he would not appear, citing various spurious objections for the first time, including concerns about San Francisco as a suitable location for testifying, according to the agency’s report.
X’s Silence Amidst the Investigation
X, headquartered in San Francisco, has yet to respond to requests for comments.
SEC’s Probe into Pre-2013 Twitter
The SEC’s investigation focuses on the period before Musk’s takeover in 2013 when Twitter was publicly traded. It’s important to note that the agency has not concluded that anyone violated federal securities laws.
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Musk’s Controversial Twitter Acquisition
Elon Musk, Tesla’s Chief Executive Officer, signed a $44 billion contract to acquire Twitter and take the company private in October 2022, following a protracted legal dispute with the company’s previous management.
Lawsuit Over Musk’s Disclosure Delays
After initially agreeing to purchase Twitter at the beginning of April 2022, Musk attempted to back out of the deal, prompting the company to file a lawsuit to compel him to proceed with the acquisition.
Protecting Investors: SEC’s Responsibility
In April 2022, the SEC he announced an investigation into potential violations of securities laws related to Musk’s acquisition of Twitter stock, as well as his statements and SEC documents regarding the company.
Location Controversy: Musk vs. SEC
During the same month, Twitter shareholders from New York filed a lawsuit alleging that Musk unlawfully delayed disclosing his stake in the social media company, allowing him to purchase more shares at a lower price. The case centered on whether Musk violated a regulatory disclosure deadline to reveal his ownership equivalent to five percent. It claimed that Musk’s actions adversely affected smaller investors who purchased shares within the two weeks before Musk acknowledged his significant stake.
Musk’s Legal Team’s Response
The SEC did not provide specific details about the investigation in its court documents but emphasized its responsibility to protect investors and its authority to conduct investigations. The SEC has also indicated its willingness to accommodate Musk’s compliance by offering multiple locations for his testimony, including one near his Fort Worth, Texas, residence. However, Musk’s legal team responded that he was not scheduled to testify at these locations.
Conclusion
The SEC’s push for Elon Musk’s testimony in the Twitter purchase investigation is a significant development. Musk’s refusal to testify adds complexity to the case. The SEC is investigating potential securities law violations and disclosure delays related to Musk’s Twitter acquisition. This ongoing legal battle could have broader implications for securities law compliance. Stakeholders will closely monitor the case as it unfolds.