SEC Initiates Enforcement Action Against Elon Musk Over Twitter Acquisition
The U.S. Securities and Exchange Commission (SEC) has issued a subpoena to Elon Musk, the owner of X (formerly Twitter). This action comes after Musk failed to appear for an agreed-upon testimony, leading the SEC to issue an “Order Compelling his Attendance for Investigative Testimony.”
Musk had previously agreed to testify regarding his takeover of Twitter, which had raised concerns at the SEC. The billionaire has long been known for his dislike of the SEC. In response to the subpoena, Musk called for an overhaul of regulatory agencies such as the SEC.
Musk added, “Can’t wait for this to happen.”
What Does the Order Mean?
The SEC says it has filed the court order to compel Elon Musk to comply with a subpoena related to an ongoing investigation into potential securities law violations concerning his 2022 Twitter share purchases and related statements.
Despite initially agreeing to testify, Musk did not appear and raised objections at the last minute. The SEC says it seeks Musk’s testimony to gather necessary information. The outcome depends on the court’s decision, and the SEC’s investigation is ongoing. The SEC has clarified that it “has not concluded that any individual or entity has violated the federal securities laws.”
The SEC stated, “According to the filing, the SEC seeks Musk’s testimony to obtain information not already in the SEC’s possession that is relevant to its legitimate and lawful investigation.”
Musk Faces Several Lawsuits
While the SEC has not officially filed claims against Musk, there are several pending lawsuits, some filed by Musk and others filed against him.
In a related matter concerning the Twitter acquisition, Reuters reported that U.S. District Judge Andrew Carter has allowed a lawsuit against Musk to proceed. The suit alleges that Musk defrauded former Twitter shareholders when he purchased and rebranded X. Additionally, he failed to disclose his investment on time, as alleged in the lawsuit.
Judge Carter’s decision allows shareholders in the proposed class action to sue Musk over the alleged intention to defraud them by waiting 11 days beyond an SEC deadline. While the judge dismissed insider trading claims against Musk, he stated that shareholders had the right to know about his 5% ownership of Twitter shares.