The U.S. Securities and Exchange Commission (SEC) has announced plans to seek sanctions against Elon Musk after he failed to show up for a court-ordered testimony regarding his $44 billion acquisition of Twitter. The regulator claims Musk ignored a court order and failed to attend the scheduled deposition on September 10.
According to a filing in San Francisco federal court, the SEC intends to file a motion requesting the court to issue an order demanding that Musk explain why he should not be held in civil contempt. The move comes after the tech billionaire reportedly notified the SEC only three hours before the scheduled testimony that he would not be present.
Instead of attending the deposition, Musk traveled to Cape Canaveral, Florida, to oversee the launch of SpaceX's Polaris Dawn mission. The SEC argues that Musk, as SpaceX's Chief Technical Officer, would have been well aware of the launch schedule since it had been discussed two days prior. The SEC says this action violated a May 31 court order that compelled Musk to testify.
Alex Spiro, Musk's attorney, called the SEC's potential sanctions "drastic" and "unnecessary," citing concerns that Musk's absence from the launch could have jeopardized the safety of the astronauts involved in the mission. Spiro also noted that the testimony has been rescheduled for October 3, downplaying the severity of Musk's absence.
An SEC spokesperson declined to comment on the ongoing legal dispute, but the regulator stated in its court filing that it remains concerned about Musk's compliance with the rescheduled testimony date.
The SEC's investigation is focused on whether Musk violated securities laws in early 2022 when he began buying shares of Twitter. Shareholders and the SEC have criticized Musk for delaying the disclosure of his stake in the company. Under securities law, investors must disclose when they reach a 5% ownership stake in a public company. However, Musk waited over 10 days to reveal that he had acquired a 9.2% stake in Twitter, only to offer to buy the entire company shortly thereafter.
The SEC initially sued Musk last October after he failed to appear for a scheduled interview at their San Francisco office. In response, Musk has accused the agency of harassment through repeated subpoenas and legal challenges. This isn't the first time Musk has clashed with the SEC. In 2018, the commission sued him over tweets about taking Tesla private, which resulted in Musk paying a $20 million fine and agreeing to have Tesla lawyers pre-approve certain social media posts. He also relinquished his role as Tesla's chairman as part of the settlement.
With the rescheduled testimony date looming, the SEC will be watching closely to see if Musk complies this time, or if the saga will lead to further legal action.