The US Securities and Exchange Commission wants to force Elon Musk to make a statement about the Twitter purchase by court order. The tech billionaire did not appear for questioning in September despite being summoned.
In its investigation into the billion-dollar Twitter takeover, the US Securities and Exchange Commission (SEC) wants to force Elon Musk to testify in court. The authority filed a lawsuit in San Francisco. It is examining Musk’s public statements and stock purchases surrounding the purchase of Twitter.
Several U-turns in the Twitter deal
The tech billionaire took over the online service at the end of October 2022 and renamed the platform X. He had already started buying Twitter shares at the beginning of last year. However, the head of the electric car manufacturer Tesla then made several U-turns on the deal.
First he announced a shareholding he had quietly purchased and agreed to join the board of directors as a shareholder. He then announced that he wanted to buy the company completely instead. A few weeks after Twitter agreed to the $44 billion takeover, Musk finally wanted out of the deal because the network had too many fake accounts and bots.
Twitter then sued him to force him to comply with the agreement. After it became apparent that he was likely to lose the lawsuit, Musk gave in in the fall and finally completed the purchase.
Musk did not appear for questioning
The SEC has been investigating the deal since spring 2022. Originally, the delay in announcing Musk’s Twitter stake may have brought the stock market regulator into action. Musk reached 9.2 percent of Twitter shares in March – but didn’t make this public until April. According to the rules, if a listed company exceeds the five percent mark, it must be announced within ten days.
In general, the SEC is examining whether Musk violated any laws when purchasing the short message service. The mandatory notifications to the supervisory authority in connection with the deal are also being examined. Court documents revealed yesterday that the SEC now wants Musk to be forced to comply with a call for a hearing. Accordingly, the entrepreneur had agreed to an appointment in September, but then did not appear at the survey.
His testimony was needed “to obtain information that the SEC does not have and that is relevant to legitimate and lawful investigations,” it said. A Musk lawyer, however, explained that the authority had already received enough statements from the billionaire in this context: “Enough is enough.”
Not the first dispute with the SEC
Musk has been at loggerheads with the SEC for years. The confrontation was triggered by tweets in which Musk announced in August 2018 that he wanted to take Tesla off the stock exchange. Specifically, the focus was on his claims that financing for such a deal was secured and that there was broad investor support for it.
It later emerged that there were no written commitments from backers – and many important investors wanted Tesla to stay on the stock exchange. Musk abandoned the plan shortly afterwards.
The SEC accused Musk of misleading investors because of his statement about the allegedly secured financing. He and Tesla had to pay fines of $20 million each. Musk also had to give up his chairmanship of the board of directors and agree to have Tesla approve potentially price-sensitive tweets. The Tesla boss tried in vain to get rid of these reins several times.