Elon Musk Faces SEC Lawsuit Over Twitter Takeover Probe: Refuses to Testify

In a significant development, the U.S. Securities and Exchange Commission (SEC) has initiated legal action against Elon Musk, the world’s wealthiest individual, as part of an investigation into his $44 billion acquisition of social media giant Twitter. This move intensifies an ongoing feud between Musk and the regulatory body, with the investigation centering on whether Musk violated federal securities laws in 2022 during his purchase of Twitter, which he later rebranded as “X.” The inquiry also scrutinizes statements and SEC filings made by Musk in connection with the acquisition.

The SEC initially raised questions about Musk’s disclosure of his stake in Twitter in May 2022, specifically examining whether he filed the appropriate paperwork. In its recent court filing, the SEC revealed that it had subpoenaed Musk in May 2023, requesting his testimony at their San Francisco office. Musk initially agreed to appear on September 15 but abruptly reversed course two days prior, citing various objections. One of Musk’s objections was that the SEC’s actions were tantamount to harassment. He also claimed that his legal counsel needed time to review potentially pertinent material from a biography of Musk published the prior month.

According to the filing, Musk has already provided the SEC with documents related to the investigation and had previously given testimony via video conference in July of the previous year.

Alex Spiro, an attorney representing Musk, commented on the matter, stating, “The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation – enough is enough.”

The SEC, in a press release, stated that it seeks “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 provide further comment.

Elon Musk’s acquisition of Twitter followed his initial establishment of a significant minority stake in the social media platform, which he disclosed in April 2022. His initial disclosure was delayed, and he indicated that he planned to be a passive stakeholder. However, in a series of events, Musk accepted and subsequently rejected a board seat at Twitter before announcing plans to purchase the company for $44 billion. He later attempted to back out of the deal, alleging that Twitter had not fully disclosed the extent of bot activity on its platform.

Facing legal pressure to finalize the acquisition, Musk ultimately completed the Twitter takeover in late October 2022.

This latest lawsuit marks another episode in the ongoing feud between Musk and the SEC, which began with Musk’s 2018 tweet announcing his intention to take Tesla private and claiming that he had secured funding for it. Since then, Musk has frequently criticized the SEC, which has launched multiple investigations into his actions.

Musk recently stated on his platform, “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.”

Legal experts have noted that Musk’s refusal to testify in the September hearing is highly unusual. Howard Fischer, a partner at the law firm Moses & Singer and a former SEC official, commented, “I have never heard of a senior executive who has positions at public companies ever not showing up.”

In addition to the SEC lawsuit, Musk is currently facing other legal challenges, including an investigation by the Justice Department into Tesla’s self-driving claims and a federal investigation in New York related to Musk’s corporate benefits and assertions concerning vehicle driving range.