SEC To Seek Sanctions Against Musk For Not Appearing For Testimony Over Twitter Acquisition

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

The U.S. Securities and Exchange Commission (SEC) said on Sept. 20 that it plans to pursue sanctions against Elon Musk for not attending court-ordered testimony in connection with the agency’s investigation into his $44 billion acquisition of Twitter.

Elon Musk speaks at an AI conference in Beverly Hills, Calif., on May 6, 2024. Apu Gomes/Getty Images

The SEC stated in a filing with the U.S. District Court for the Northern District of California, that it plans to file a motion seeking an order requiring Musk to explain why he should not be held in civil contempt for failing to comply with a May 31, 2024, court order requiring him to testify on Sept. 10 at the SEC’s Los Angeles office.

The two parties had originally agreed that Musk would appear for the testimony on Sept. 19, but in July, Musk’s counsel requested to move the date due to a scheduling conflict. The SEC accommodated the request, rescheduling the testimony to Sept. 10. However, on the morning of Sept. 10, Musk’s legal team sent a letter to the SEC stating that his obligations as SpaceX’s chief technology office required urgent travel to the East Coast for a “high-risk” Polaris Dawn launch.

Musk’s attorney, Alex Spiro, argued in the filing that his client’s absence on Sept. 10 was due to an unavoidable emergency regarding the Polaris Dawn launch, requiring his presence in Cape Canaveral.

Musk, as SpaceX’s chief technical officer, “had to be present at the Cape Canaveral launch site for the Polaris Dawn launch, and the timing of the launch was unpredictable due to weather,” Spiro wrote, adding that it was impossible to predict more than a few hours in advance when the launch would take place.

Spiro argued that sanctions are unnecessary since the rescheduling was due to an emergency, and Musk has already agreed to a new testimony date in October. He added that Musk has fully cooperated with the SEC in multiple investigations.

But an SEC attorney said in the filing that, given Musk’s role at SpaceX, he was surely aware of the planned launch and that his excuse of an emergency rings hollow.

“Musk’s excuse itself smacks of gamesmanship,” SEC lawyer Robin Andrews wrote in the filing. “The court must make clear that Musk’s gamesmanship and delay tactics must cease.”

Andrews argued that Musk’s last-minute cancellation resulted in unnecessary costs, as SEC attorneys from San Francisco and Washington had already traveled to Los Angeles for the testimony.

Besides planning to file a motion for an order requiring Musk to explain why he should not be held in civil contempt for failing to appear at the scheduled testimony, the SEC is also requesting to recoup travel costs associated with the canceled deposition.

The SEC’s investigation is part of an ongoing probe into whether Musk violated securities laws in connection with his 2022 purchase of Twitter, which he has since renamed to X.

Specifically, the regulator is examining whether Musk made required filings in a timely manner when he initially bought a stake in the social media company.

A court hearing on the matter is expected later this month.