Elon Musk can't wriggle out of SEC Twitter fraud inquiry
Lawyers argue requests for more info are tantamount to harassment
A federal judge has ruled in favor of the Securities and Exchange Commission (SEC), ordering tech mogul Elon Musk to return for additional testimony in their investigation of his 2022 Twitter acquisition.
Musk, who previously testified twice in the matter, had refused to answer further questions, calling the SEC's requests unreasonable and harrassing. However, Judge Laurel Beeler of the Northern District of California disagreed [PDF], stating that the evidence sought is relevant and the testimony is not an undue burden.
This latest development follows the SEC's receipt of "thousands of new documents" after Musk's initial appearances. The agency aims to question him about this new information and clarify potential discrepancies between his previous statements and actions leading up to the buy of Twitter (now known as X).
The SEC is investigating whether Musk committed civil fraud by not disclosing his plans for Twitter when he bought shares between January and April 2022, according to court documents. Initially claiming to be a passive investor, Musk later joined the company's board and eventually purchased it for $44 billion in October 2022.
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Though scheduled to testify on September 15, 2023, Musk failed to appear. Even an offer by the SEC to meet closer to his Texas residence was met with refusal. His lawyers maintain that the investigation is "frivolous" and the SEC's demands are excessive.
The judge has instructed both parties to reach an agreement on a new testimony date and location within a week. If they cannot, they can submit their respective positions to the court for a final decision.
Musk has form for beef with the SEC. While this investigation dates back to 2022, the SpaceX and Tesla CEO has most recently been trying to overturn a consent decree with the watchdog that requires a lawyer to vet the billionaire's posts on Twitter that could have an material effect on his car company or its investors.
In 2018, Musk announced: "Am considering taking Tesla private at $420. Funding secured." This did not happen.
Musk's defense in this case is that the SEC is acting unconstitutionally and violates his free speech. ®