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23 SEP 2024 / SEC
The SEC is turning up the heat on Elon Musk after he missed a court-ordered testimony regarding his $44 billion Twitter buyout. This isn’t the first time Musk’s actions have caught the SEC’s attention, but this latest chapter could lead to serious consequences.
Musk was scheduled to testify on September 10, but instead chose to attend a SpaceX rocket launch in Cape Canaveral. The SEC, which had already spent thousands of dollars to fly three attorneys to Los Angeles for the testimony, received Musk's last-minute notice just three hours before the scheduled appearance. The SEC has described Musk’s actions as “gamesmanship,” emphasizing that he was well aware of the rocket launch plans.
The SEC is now considering sanctions against Musk, seeking an order for him to show cause as to why he should not be held in civil contempt for missing the testimony. Although Musk's legal team argued that the testimony was "rescheduled for the critical rocket launch" and called the sanctions “drastic and inappropriate,” the SEC is proceeding with its case. They’ve set a new testimony date for October 3, but all eyes are on whether Musk will appear this time.
This isn’t Musk's first run-in with the SEC. He was previously fined $20 million in 2018 for misleading tweets about taking Tesla private. His latest actions have drawn more scrutiny, especially regarding whether he violated securities laws when he began accumulating Twitter stock in early 2022.
The SEC's probe centers around whether Musk failed to disclose his 5% ownership of Twitter on time, a requirement for public company investors. When he finally did disclose, it turned out he was holding a 9.2% stake, which raised further concerns about his intentions. Despite Musk’s claim of misunderstanding the disclosure rules, the SEC's investigation suggests otherwise.
As the world’s wealthiest individual with a net worth estimated at $257.3 billion, Musk’s decisions often make headlines. The next chapter will unfold on October 3, when he is expected to testify. It seems controversy is surrounding Twitter from all sides. Currently, the platform is blocked in ten countries, including Brazil, China, Iran, Myanmar, North Korea, Pakistan, Russia, Tanzania, Turkmenistan, and Venezuela. On top of that, investment banks are not feeling too confident about its future plans, adding to the uncertainty looming over Twitter’s journey ahead.
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