LDN - Business

SEC tries to force Musk to testify in Twitter takeover probe

[October 06, 2023] (Reuters) -Elon Musk, the world's richest man, is being sued by the U.S. Securities and Exchange Commission, which is trying to compel him to testify as part of a probe into his $44 billion takeover of social media giant Twitter, a Thursday court filing showed.

The investigation, which escalates a long-running feud between the SEC and Musk, concerns whether Musk broke federal securities laws in 2022 when he bought stock in Twitter, which Musk renamed X, as well as statements and SEC filings he made in relation to the deal.

The SEC in May 2022 said it was looking into Musk's disclosure of his stake in Twitter, questioning whether he filed the appropriate paperwork.

The SEC in Thursday's filing said it subpoenaed Musk in May 2023 requiring him to provide testimony at the SEC’s San Francisco office, and that Musk had agreed to appear on Sept. 15. But then two days beforehand Musk raised "several spurious objections" and told the SEC he would not appear, the SEC said.

Musk also refused SEC proposals to conduct the deposition in Texas in October or November.

Among his objections was that the SEC was trying to “harass” him and his counsel needed time to review potentially relevant material contained in a biography of Musk published last month, the SEC said.

According to the filing, Musk has given the SEC documents relating to the probe and has previously provided testimony in July last year via video conference.

"The SEC has already taken Mr. Musk's testimony multiple times in this misguided investigation - enough is enough," said a statement from Alex Spiro, an attorney for Musk.

In a press release, the SEC said it was seeking "Musk’s testimony to obtain information not already in the SEC’s possession that is relevant to its legitimate and lawful investigation." An SEC spokesperson declined to comment further.

Musk acquired Twitter after initially building a large minority stake in the social media platform, which he first disclosed in April 2022. Musk was late with the disclosure filing and initially indicated he planned to be a passive stakeholder, meaning he did not plan to take over Twitter or influence its management decisions.

[to top of second column]

Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of Twitter, gestures as he attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. REUTERS/Gonzalo Fuentes/File Photo

Days later, Musk accepted and then turned down a board seat at Twitter. In late April, he announced plans to buy the company for $44 billion but subsequently tried to get out of the deal, alleging Twitter was not disclosing the full extent of bot activity on its platform.

Faced with a trial that sought to compel him to complete the deal, Musk closed his acquisition of Twitter in late October 2022.

MUSK-SEC FEUD

Thursday's filing is the latest brushup between Musk and the SEC which have been feuding since Musk's 2018 tweet that he planned to take his electric carmaker Tesla private and had funding secured. Since then, Musk has repeatedly denigrated the SEC, which has opened multiple probes into him over the years.

“A comprehensive overhaul of these agencies is sorely needed, along with a commission to take punitive action against those individuals who have abused their regulatory power for personal and political gains,” Musk said in a post on X.

Howard Fischer, a partner at law firm Moses & Singer and a former SEC official, said Musk's refusal to appear at the September testimony was extraordinary. "I have never heard of a senior executive who has positions at public companies ever not showing up."

Thursday's lawsuit adds to Musk's legal woes. Reuters previously reported the Justice Department is investigating Tesla over self-driving claims. Federal prosecutors in New York have also opened an investigation related to Musk's corporate perks and claims related to vehicle driving range, according to a report.

(Reporting by Shivansh Tiwary in Bengaluru; Tom Hals in Wilmington, Delaware; Chris Prentice in New York; Michelle Price in Washington; and Sheila Dang in Austin; Editing by Megan Davies, Shinjini Ganguli and Lisa Shumaker)

Back to top