A federal judge tentatively ruled on Thursday that Elon Musk must testify again in SEC (Securities and Exchange Commission’s) investigation into his $44 billion Twitter Takeover, handing the SEC a victory in its latest battle with the world’s richest person.
During a hearing in San Francisco, U.S. Magistrate Judge Laurel Beeler quickly rejected Musk’s attorney’s arguments that SEC officials lack the authority to issue subpoenas, saying the agency has broad investigative powers and that no judge would “second guess” an SEC investigation.
Beeler warned the parties that she would issue an order unless Musk agreed to another four-hour deposition.
“If you don’t work it out, it’ll be in San Francisco in February,” she said at Thursday’s meeting.
The SEC sued Musk in October to compel him to testify as part of an investigation into his 2022 acquisition of social media giant Twitter, which he renamed X. According to the SEC, Musk refused to attend a September interview for the investigation.
Also read: US SEC presses judge to force Elon Musk to testify in Twitter probe
The agency is investigating whether Musk followed the law when filing the necessary paperwork with the agency about his purchases of Twitter stock, as well as whether his statements about the transaction were misleading.
The spat on Thursday is the latest in a years-long feud between Musk and the top U.S. market regulator, which began in 2018 when Musk tweeted that he had “funding secured” to take Tesla private.
Since April 2022, when Musk first disclosed he had purchased stock in the company, the SEC has been investigating Musk’s Twitter takeover. According to the SEC’s filing, Musk provided the SEC with documents for its investigation and testified via videoconference for two half-day sessions that July.
After receiving new documents, SEC attorneys said they had more questions for Musk and requested additional testimony in September, but Musk refused.
Musk’s lawyers urged Beeler to deny the SEC’s request in response to the SEC’s October lawsuit, calling the investigation misguided. “The SEC’s pursuit of Mr. Musk has crossed the line into harassment,” they wrote last month in a filing.
They also claimed that, due to a constitutional provision governing official appointments, the investigators are not lawfully appointed and thus lack the authority to issue subpoenas. The judge stated that she is inclined to agree with the SEC on the issue, but that she would look into it further before issuing her order.
She also admitted that the demands of long-running investigations can be “frustrating,” but she still sided with the SEC minutes, dismissing Musk’s attorney’s arguments emphatically.
“You have one more four-hour deposition, one more day of depositions to go before it’s all over.” “It doesn’t appear that there will be any more trouble,” she said.
TWITTER TAKEOVER
Musk has been at odds with the SEC since his “funding secured” tweet in 2018. The SEC settled the case, but Musk was sued again in 2019 for allegedly violating the terms of the settlement. A shareholder lawsuit was also filed in response to the tweets. Musk was found not liable for misleading investors by a jury in February.
Also read: Elon Musk’s X Fails To Pay US $388,000 Australian Internet Online Safety Watchdog Fine
Several other investigations into Musk and Tesla have been launched by the agency over the years.
Musk announced on April 4, 2022, that he had purchased a 9.2% stake in Twitter. It was 11 days after the SEC’s disclosure deadline. Musk initially stated in that regulatory filing that he intended to be a passive shareholder, which meant that he did not intend to take over the company.
Later that month, he announced plans to purchase Twitter for $44 billion. He later attempted to back out of the agreement, claiming that Twitter was not disclosing the full scope of bot activity on its platform.
Musk completed his acquisition of Twitter in late October 2022, after being sued to do so.
