The US Securities and Exchange Commission wants a federal judge to show Elon Musk that there will be serious costs if he blows off court-ordered testimony in the agency’s probe of his takeover of Twitter, according to court documents filed Friday.
“Without further action by the Court, nothing deters Musk from violating the May 31, 2024 Order again by simply failing to show up for that date,” Robin Andrews, an SEC attorney, wrote in a court filing.
For now, the SEC does not want to sanction Musk; it just wants the X owner to know that he will face repercussions if he misses his now-rescheduled testimony early next month.
The commission is investigating Musk’s 2022 acquisition of Twitter, later rebranded as X. The SEC has previously disclosed that it is investigating whether Musk violated securities law by secretly amassing Twitter stock in 2022 and statements he made before the ultimately successful $44 billion deal was finalized. Musk had tried to resist the SEC’s efforts to compel him. US Magistrate Judge Laurel Beeler said in February that Musk viewed the SEC’s investigation as “baseless and harassing.”
The SEC and Musk, who have tussled repeatedly in the past, disagree on whether Musk blew them off when his attorneys told the agency he could not show up for previously scheduled testimony in California on September 10 because he needed to attend a SpaceX’s Polaris Dawn launch in Florida.
Andrews’ filing said that Musk’s attorneys sent their request to reschedule his testimony just three hours before he was scheduled to testify at the SEC’s Los Angeles office. In the regulator’s view, Musk should have known about the launch and made proper arrangements beforehand.
“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,” the filing said.
Musk’s attorney, Alex Spiro, responded that the SEC’s intent to seek sanctions is a “drastic action” that is inappropriate at this time. Spiro also argued that Musk’s attendance at the SpaceX launch was exactly the type of emergency that the court order agreed could lead to rescheduling.
“The parties have already rescheduled the testimony for approximately three weeks after the original date, an immaterial amount of time in the context of an investigation that began two and a half years ago,” Spiro wrote in his part of the joint statement to the court. “Any request for sanctions should be denied.”
In response to Business Insider, Spiro continued to dismiss the SEC’s efforts.
“The last time the SEC went hysterically running into court, they were told to ‘put their big boy pants on,'” Spiro wrote in an email to BI.
The SEC declined to comment on Spiro’s claim.
Musk’s contempt for the SEC is well documented.
In 2018, he lashed out after a settlement with the regulator led him to step down as chairman of Tesla for three years and to pay a $20 million fine. The agreement did not require Musk or Tesla to admit to or deny the SEC’s allegations related to his tweet where he claimed to have “secured” funding to potentially take Tesla private at $420 a share.
“Just want to that the Shortseller Enrichment Commission is doing incredible work,” Musk wrote on Twitter. “And the name change is so on point!”
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