US SEC Targets Elon Musk for Potential Sanctions in Twitter Probe

The  U.S. Securities and Exchange Commission (SEC) announced on 20 September about taking legal action against Elon Musk by potentially imposing “sanctions” on him as he has not shown up for a scheduled testimony session ordered by the court for a regulatory investigation into his purchase of Twitter for $44 billion.

SEC Seeks Sanctions for Musk’s Absence

The SEC stated in a document submitted to a federal court based in San Francisco that it intends to ask the court to impose sanctions as Elon has disrespected the court’s order by not following it.

The regulator asked the court why Musk is not held accountable for potential legal action such as penalties. He waited until there were only three hours left before the start of the testimony session on 10 September to announce his absence.

Elon Musk, the owner of electric car maker Tesla (TSLA.O), SpaceX, a rocket company, and X (formerly Twitter), is the wealthiest man in the world.

He suddenly flew to Cape Canaveral, Florida, to attend the “launch of SpaceX’s Polaris Dawn mission” without knowing its launch date. SEC emphasizes it was a planned escape to skip the testimony session.

SEC Focuses on Musk’s Intentional Delay

SEC argued that being the chief technical officer of SpaceX, Musk “surely was already aware” of the scheduled launch. The firm had already confirmed the launch date two days before its original date and decided to launch on a specific date.

Musk’s act of delaying the testimony session and canceling the appearance at the last moment breached the court orders from 31 May for his testimony session.

Statements by SEC and Musk’s Lawyer on Delay

Musk’s attorney, Alex Spiro, has described sanctions as “drastic and unnecessary,” he mentioned that if Musk had not shown up at the launch, it could have put the lives of astronauts in danger.

He has been confirmed about the rescheduling of testimony on 3 October.

Read Also:

• Lithuania Imposes a €9.3 Million Fine on Payeer for Breaching AML Regulations and Sanction Evasion
• Swedbank’s Ex-CEO Bonnesen Sentenced to 15 Months for Misleading AML Statements
• US Charges Russian TV Presenter for Violating Sanctions And Money Laundering

Delay Due to Unexpected Emergency

Musk did not show up for testimony on 10 Sep due to an unexpected “emergency” that was not in his control, and neither did he create it, the lawyer explained.

Spiro added, “There is no reason to believe such an emergency will reoccur.”

Although the SEC representative had not responded to this statement, the regulator stated in the court filing that Musk would again fail to appear on 3 Oct and make any other excuse.

Musk’s Late Twitter Share Disclosure

The SEC is investigating Musk’s actions to assess whether he breached any laws when purchasing Twitter shares in early 2022.

Twitter shareholders targeted Musk for publicly disclosing the purchase of Twitter shares ten days later.

Investors typically publicly announce their ownership after buying 5 % of the company. Musk revealed its 9.2% ownership in Twitter’s shares, and later, he made a deal to buy the entire company, as reported by a media source.

Clarification by Elon Musk

Musk clarified the misunderstanding related to “SEC  disclosure requirements” in July. It explained that “all indications” highlighted his dealy was a “mistake,” and he was unaware of every requirement.

Musk’s Legal Struggles with SEC and Past Disputes

SEC filed a lawsuit against him after skipping the interview at its office in San Francisco.

Musk showed he was upset because the SEC attempted to “harass” him by sending subpoenas. All these disputes between Musk and the SEC have a long history behind them.

In 2018, the SEC charged him with his Twitter posts about taking Tesla private. Musk resolved the issue by giving up his position as Tesla chairman, accepting the review of the post by Tesla lawyers before posting, and paying a $20 million fine.