Elon Musk, CEO of SpaceX and Tesla and owner of X, attends the Milken Conference 2024 Global Conference Session at the Beverly Hilton in Beverly Hills, California, USA, May 6, 2024.
David Swanson | Reuters
The Securities and Exchange Commission has asked a federal judge to impose sanctions on Elon Musk if he continues to violate a court order requiring him to appear for a deposition in the investigation into his 2022 acquisition of Twitter.
The SEC has been investigating whether Musk or anyone else working with him committed securities fraud in 2022. Tesla The CEO sold his stake in the automaker and boosted his stake in Twitter ahead of a leveraged buyout of the company now known as X.
In May, a court ordered Musk to appear at a deposition before financial regulators regarding his dealings with Twitter.
“This is the second time Mr. Musk has failed to appear before the SEC — first in September 2023, contrary to a lawful administrative subpoena, and then last week, contrary to an express court order,” SEC attorney Robin Andrews said in a Friday filing.
According to the filing, Judge Andrews asked the judge to consider sanctions if Musk delays further.
“The Court must make clear that Musk’s bargaining and delaying tactics must end,” Andrews wrote.
A footnote in the filing also said the SEC intends to ask the court to hold Musk in “civil contempt” for canceling his testimony on September 10 with only hours’ notice that he would not appear in court. The SEC said Musk’s cancellation cost the SEC time and money because it had sent personnel to Los Angeles to testify against him and he never showed up to the investigative hearing.
Musk’s testimony in the investigation has been rescheduled for early October at the SEC’s offices, according to the filing.
“Absent further court action, we cannot prevent Mr Musk from failing to attend on that date,” Andrews wrote.
“Such extreme measures are inappropriate,” Musk’s lawyer, Alex Spiro, a partner at Quinn Emanuel law firm in New York, said in a response, adding that the SEC and Musk had agreed that the schedule change was permissible given the emergency circumstances.
Additionally, Musk and his company “have cooperated, and continue to cooperate, with the SEC in multiple ongoing investigations,” Spiro wrote.
Separately, Civil litigation In the same Twitter deal, the Oklahoma State Firefighters’ Pension and Retirement System filed a lawsuit against Musk in federal court in New York, accusing him of deliberately concealing his progressive investment in Twitter and his intent to acquire the company.
Lawyers for the pension funds argue that Musk’s failure to clearly disclose his investment in Twitter and his intention to acquire it influenced the decisions of other shareholders to their detriment.
The New York investigation into the incident uncovered correspondence between an unnamed Morgan Stanley employee and Jared Birchall, an executive who manages Musk’s finances. In the messages, a Morgan Stanley representative wrote in February 2022 that Musk’s Twitter stock-buying strategy was being kept secret.
“No one knows what’s going on or why it’s going on except you and me,” the Morgan Stanley source wrote. “No one knows, not even the compliance folks.”
Read the court documents below.
