The US Securities and Exchange Commission is seeking to force Elon Musk to testify as it investigates the billionaire’s purchases of Twitter Inc. shares ahead of his takeover of the social media platform.
(Bloomberg) — The US Securities and Exchange Commission is seeking to force Elon Musk to testify as it investigates the billionaire’s purchases of Twitter Inc. shares ahead of his takeover of the social media platform.
The Wall Street regulator said on Thursday that Musk failed to appear to testify last month as requested, and asked a judge to force him to. The agency is reviewing Musk’s statements and disclosures about the stock transactions, according to a filing by the agency in federal court in San Francisco.
The SEC began its probe in April 2022 and has requested thousands of documents from Musk and other parties, the agency said. The billionaire has already sent hundreds of documents, and testified twice in July 2022, according to the filing, which described an ongoing, nonpublic investigation.
“The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation – enough is enough,” Alex Spiro, an attorney for Musk, said in a statement.
Musk agreed to an interview with the SEC last month, the agency said. However, two days before the scheduled Sept. 15 meeting, Musk raised several objections, including that San Francisco wasn’t the appropriate location for it. Investigators suggested new dates and agreed to move the interview to Fort Worth, Texas, near where Musk now lives, but he then refused to meet at all, according to the filing.
The SEC rarely takes the step to enforce a subpoena, and the courts often side with the regulator when they do, Marc Fagel, a lecturer at Stanford Law School and former SEC official in San Francisco, said in an interview.
“For the SEC to come out of the woodwork and make it public that they’re investigating, that’s a big step,” Fagel said.
Before acquiring all of Twitter, Musk first purchased a 9.2% stake in the social media firm in March 2022. He then disclosed the stake to the SEC in April. The agency’s rules require most people who buy more than 5% of a public company to disclose it within 10 days.
As Musk was ramping up his holdings of Twitter stock, the SEC sent a query to the billionaire in April 2022 over how he disclosed his major stake. The letter from the SEC’s mergers and acquisitions office was focused on the form that investors must file when they accumulate more than 5% of a company, Bloomberg reported last year.
Musk, the richest person in the world, now oversees six companies, including Tesla Inc., Twitter Inc. and SpaceX, a major government contractor. Over the years, he has tangled frequently with the securities regulator, which he called the “Shortseller Enrichment Commission” in October 2018.
That same year, the billionaire agreed to pay a $20 million fine, give up his chairmanship at the carmaker, and clear future tweets about that firm with an internal monitor, after the SEC investigated his comments about planning to take the company private.
The Wall Street regulator has also been probing Musk’s role in shaping Tesla Inc.’s self-driving car claims. SEC officials are weighing whether Musk may have inappropriately made forward-looking statements, Bloomberg News reported in January.
–With assistance from Tom Schoenberg and Dana Hull.
(Updates with quote from attorney in sixth paragraph)
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