SEC Planning Sanctions Against Elon Musk After Missed Testimony In Twitter Probe

20 Sep 2024 by Antonio Pequeño IV · Forbes

Topline

The Securities and Exchange Commission is planning to bring sanctions against Elon Musk over his failure to testify for the agency’s investigation into his $44 billion Twitter buyout, according to a Friday court filing, though a new testimony date has been made for early October.

The filing was issued Friday in San Francisco. (Photo by Michael M. Santiago/Getty Images)Getty Images

Key Facts

Musk did not show for his Sept. 10 appearance in Los Angeles, according to the filing, which noted the SEC intends to seek an order to demand Musk explain why he should not be held in civil contempt for telling the SEC on short notice that he would testify then.

The scheduling conflict stemmed from a SpaceX rocket launch Musk attended, with the tech executive notifying the SEC of his intention to attend the launch three hours before his testimony was supposed to begin, “and after the SEC spent thousands of dollars to fly three attorneys to Los Angeles” according to the filing.

The SEC said the “Musk excuse itself smacks of gamesmanship,” citing the announcement of the launch being made two days before the scheduled testimony and Musk’s role as SpaceX’s chief technology officer.

Musk’s attorneys characterized the launch as an emergency requiring Musk’s attendance and said in the filing that sanctions were drastic and inappropriate, citing the importance of Musk’s attendance at the launch, his cooperation throughout the probe and the rescheduling of the testimony for Oct. 3.

The SEC declined to comment.

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What We Don’t Know

The SEC did not specify what sanctions it plans to bring against Musk.

Forbes Valuation

We estimate Musk’s net worth at $257.3 billion, making him the world’s wealthiest person, ahead of Amazon founder Jeff Bezos ($209.1 billion) and Oracle founder Larry Ellison ($204.5 billion).

Key Background

Musk agreed in May to testify in the probe concerning potential securities law violations linked to his $44 billion buyout of Twitter (which he later renamed X), setting him up for no more than five hours of questioning from the SEC. The agency has accused Musk of “hindering and delaying the SEC staff’s investigation” into the potential violations, according to an October filing. The investigation reportedly began in 2022 after regulators said Musk failed to disclose his then-5% stake in Twitter by the SEC’s disclosure deadline. Musk’s attorneys have attempted to get the probe dropped, calling the agency’s requests “duplicative and harassing.” Musk has gotten into hot water with the SEC before, becoming the subject of a lawsuit accusing him of securities fraud for claiming online he had the funding to take Tesla private, despite allegedly knowing the transaction was uncertain. Musk settled the lawsuit for $20 million.