Elon Musk didn’t show up for testimony in a probe over his $44 billion Twitter takeover. Now the SEC wants sanctions

By CNN Newsource

Published September 20, 2024 3:35 PM

By Clare Duffy, CNN

New York (CNN) — The Securities and Exchange Commission intends to seek sanctions against Elon Musk over his failure to appear for testimony in an investigation related to his takeover of Twitter, now called X, the regulator said in a court filing Friday.

Earlier this year, a federal judge ordered Musk to testify as part of the SEC’s probe of the billionaire’s $44 billion acquisition. The agency is examining whether Musk followed the law when disclosing his purchases of Twitter stock and whether his statements in relation to the deal were misleading.

After some initial scheduling back-and-forth, the parties had agreed that Musk would testify on September 10, and SEC lawyers flew to Los Angeles to take Musk’s testimony, according to Friday’s court filing. But three hours before his testimony was set to begin, Musk’s lawyer told the SEC that his client, who also runs SpaceX, had to urgently travel to the East Coast for the launch of the Polaris Dawn mission and would be unable to attend the testimony or reschedule to the following day, the filing states.

The two parties then struggled to find a time to reschedule the testimony before landing on a date in early October, according to the filing.

The SEC alleges that Musk violated a court order requiring that Musk “seek ‘written consent of the SEC or order of the Court’ to modify the date of his testimony,” which it says he did not do before failing to appear on September 10.

“Musk’s excuse itself smacks of gamesmanship,” the SEC said in the filing. “SpaceX had already announced that it was targeting a Tuesday morning launch two days earlier… As the company’s Chief Technical Officer, Musk surely was already aware by then that SpaceX was targeting the morning of his SEC testimony for the launch.”

It continued: “Despite this advance knowledge, Musk did not notify the SEC of his intent to attend the launch until three hours before his testimony was to begin, and after the SEC spent thousands of dollars to fly three attorneys to Los Angeles.”

Musk has previously attempted to fight efforts to testify again in the probe, saying he has already done so twice.

The SEC asked the court to impose “meaningful conditional relief” if Musk does not appear at the new October testimony date. The SEC also said it intends to file a sanctions motion against Musk to recoup its travel costs for the cancelled testimony and for other relief.

In a response filing, Musk’s lawyers argued that the “Court’s intervention is not necessary, as the parties have already agreed to a new testimony date… Mr. Musk is already under an order from this Court to appear ‘absent an emergency that (Mr. Musk) did not create and could not avoid.’”

The filing represents just the latest flare up of long-simmering tension between Musk and the SEC, which began in 2018 when the agency sued him for falsely tweeting that he had “funding secured” to take Tesla private.