The U.S. Securities and Exchange Commission announced Friday it plans to impose sanctions on Elon Musk after he failed to appear for testimony as part of the regulator’s investigation into his $44 billion takeover of Twitter.
In a document filed in federal court in San Francisco, the SEC said the motion would seek an order showing why Musk should not be charged because he waited until three hours before scheduled testimony on Sept. 10 to indicate he would not show up.
Musk, who has business relationships with electric carmaker Tesla and rocket company SpaceX and is the world’s richest person, went to Cape Canaveral in Florida that day to oversee the launch of SpaceX’s Polaris Dawn mission.
But the SEC said that as SpaceX’s chief technical officer, Musk “certainly had prior notice” of the planned launch, because the company had discussed it two days earlier. The SEC said Musk’s actions violated a May 31 court order compelling his testimony.
“Musk’s apology itself reeks of gamesmanship,” SEC attorney Robin Andrews wrote. “The court should make it clear that Musk’s gamesmanship and delaying tactics must stop.”
Alex Spiro, Musk’s lawyer, called the sanctions “drastic” and unnecessary. He said Musk’s absence from the launch could have endangered the lives of astronauts and rescheduled his testimony for October 3.
Musk’s failure to testify on September 10 was the result of an “emergency” not of his own making. “There is no reason to believe that such a situation will arise again,” Spiro wrote.
An SEC spokesperson declined to comment, but the regulator said in the court document that there is nothing preventing Musk from missing an appearance on Oct. 3.
The SEC is investigating whether Musk violated securities laws in early 2022 when he began accumulating Twitter shares.
Musk has been criticized, including by Twitter shareholders, for waiting at least 10 days too long to announce his purchase of Twitter shares.
Investors must disclose when they own 5% of the shares of publicly traded companies. Musk eventually disclosed a 9.2% stake in Twitter and shortly thereafter offered to buy the entire company.
In July, Musk said he had misunderstood the SEC’s disclosure requirements and that “all indications” pointed to his delay being a “mistake.”
The SEC filed a lawsuit last October after he missed a scheduled job interview at the firm’s San Francisco office.
Musk said the SEC was trying to “harass” him through subpoenas.
He has had a long-running beef with the SEC, including after it sued him in 2018 over his Twitter posts about privatizing Tesla.
Musk settled the lawsuit by paying a $20 million fine, agreeing to have some of the messages pre-reviewed by Tesla’s lawyers, and resigning from his role as Tesla’s chairman.
© Thomson Reuters 2024
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