Elon Musk Faces SEC Battle Over Twitter Probe
SEC Seeks Testimony from Elon Musk in Twitter Takeover Investigation
The U.S. Securities and Exchange Commission (SEC) has once again taken Elon Musk to court, and this time, the odds may be in their favor. The agency has requested a federal court to compel Musk to testify for its investigation into his $44 billion acquisition of social media giant Twitter. This marks the third legal battle between Musk and the SEC. The previous lawsuits were related to Musk’s tweets about taking his electric car company, Tesla, private. The first lawsuit was settled, with Musk agreeing to have his future tweets reviewed by lawyers. The second lawsuit did not end in the SEC’s favor.
SEC on Solid Ground with Clear-Cut Subpoena Enforcement Case
Legal experts believe that the SEC has a strong case this time, as the law regarding investigative demands and subpoenas is straightforward. Former SEC officials have stated that the agency is on solid ground. Although the stakes may be lower in this case, it once again highlights the ongoing feud between the world’s wealthiest man and the most powerful securities regulator. Stephen Crimmins, a former SEC trial lawyer, explains that this case is different because it involves enforcing a subpoena, which is a clear-cut matter defined by the law.
Possible Fines and Jail Time for Musk
If Musk defies the court’s order to testify, he may face fines until he complies. In extreme scenarios, continued defiance could even lead to jail time. The SEC’s investigation focuses on whether Musk violated securities laws in 2022 when he purchased Twitter stock, which he later renamed X. The agency is also examining statements and filings related to the acquisition. Musk initially agreed to testify but later raised objections and refused to appear, citing harassment and the need to review relevant material from a recently published biography about him.
SEC’s Ability to Seek Additional Testimony
Legal experts assert that it is not uncommon for the SEC or other federal agencies to request additional testimony as investigations progress and more information becomes available. The court is likely to order Musk to provide further testimony, as long as the subpoena is part of a legitimate effort to obtain information. In the past, courts have upheld the SEC’s subpoena rights, such as in the case of Jay-Z in 2018. Despite Musk’s ongoing animosity towards the agency, the court is expected to focus on whether the SEC has accommodated Musk’s schedule and logistical concerns.
Long-Standing Feud Between Musk and the SEC
Musk’s legal battles with the SEC have been ongoing. After agreeing to have his tweets reviewed, the agency accused him of breaching the settlement and took him to court. However, the judge challenged the settlement’s standards for assessing the materiality of tweets and urged both parties to find a reasonable resolution. Although the SEC believed Musk breached the deal on subsequent occasions, it was hesitant to return to court. Musk has openly criticized the agency and questioned its findings. Despite his personal grievances, legal experts believe that the SEC has met the necessary requirements in this case.
“Musk is trying to make a point and he doesn’t want to be pushed around,” says Robert Frenchman, a partner at Mukasey Frenchman, who has experience defending clients in SEC matters. However, the odds may not be in Musk’s favor this time, and he is unlikely to emerge victorious in this battle.