So what exactly is happening with Elon Musk and the $44 billion takeover of Twitter? And why did Musk skip a court ordered testimony about it? What's the SE CS role in the investigation and why is the agency seeking sanctions against
Elon Musk? These are some of the key questions we'll explore as we break down the latest developments in the ongoing legal saga between Elon Musk and the Securities and Exchange Commission of the SEC, specifically concerning Musk's handling of his Twitter stock purchases of the SE CS investigation revolves around whether Musk properly disclosed his purchases of Twitter stock
before buying the platform. His PRO was also scrutinizing whether his statements around the acquisition were misleading. Now, Musk's $44 billion deal to take Twitter private, now rebranded as Ex, of course, has come under intense scrutiny, with the SEC examining his actions closely to determine if he violated any securities laws during the process. Now, Musk's failure to appear for a court ordered testimony in September has now triggered the possibility of sanctions against
him. Now, earlier this year, a federal judge mandated that Musk's participation in the SE CS ongoing investigation. Specifically, the SEC wanted to take Musk's testimony regarding the sequence of his Twitter stock acquisitions and whether his public communications were accurate and lawful. The central issue is whether Musk was transparent about his stock options and the timeline
of his disclosures. Public company investors like Musk are required to disclose stock purchases after crossing a 5% threshold ownership. But the SEC suspects that Musk delayed his disclosure by at least 10 days. Now, the September testimony was crucial, and both parties had agreed on a date, September 10th of 2023. SEC lawyers made the trip to Los Angeles, expecting to hear from
Musk on that day. However, mere hours before the testimony was set to begin, Musk's lawyer informed the SEC that Musk had to urgently travel to the East Coast for the launch of Spacex's Polaris Dawn mission.
This sudden change caught the SEC off guard, given the agency had already spent significant resources flying 3 attorneys to Los Angeles for this meeting of. The SEC pointed out in a court filing that Musk's escalation for missing the testimony was inaccurate, accusing him of engaging in gamesmanship.
And the SEC noted that SpaceX had announced the launch date of the Polaris Dawn mission two days prior, which meant that Musk, as Spacex's chief technical officer, should have already known about the scheduling conflict before informing the SEC last minute. Now, the regulator found the timing of Musk's travel notification highly suspect. According to the SE CS court filing, the agency felt that Musk's abrupt withdrawal from the scheduled testimony wasn't
simply an unavoidable emergency. The SEC said that Musk should have notified them sooner rather than just three hours before the testimony, particularly because the SpaceX launch date had already been publicized. Now, the agency has expressed frustrations with Musk's actions, accusing him of deliberately delaying the investigation, which the SEC views as an attempt to obstruct the legal process now.
As a result, the SEC is now pushing for meaningful conditional relief if Musk fails to appear for a newly agreed upon testimony date in early of October. The regulator has also signaled its intention to file a sanctions motion against Musk, and the SA CS filing states that it incurred thousands of dollars in travel costs when it's legal team flew to Los Angeles for the canceled testimony.
Now, the sanctions motion would seek to recover these costs and potentially impose additional consequences on Musk for failing to comply with the court order testimony. Now, in response to the SC CS filing, Musk's lawyers argued that the court's intervention was unnecessary since both parties had already agreed on a new date for the testimony. Now, according to Musk's legal team, the rescheduled date in October should resolve this matter and the SC CS pursuit of
sanctions is excessive. Musk's attorney, Alex Spiro called the sanctions drastic and claimed the SE CS position discarded the fact that Musk's absence was due to an emergency the SpaceX mission launch, which according to Spiro could not be avoided without endangering astronauts lives. Now. Spiro also argued that Musk had complied with court orders in the past and that his failure to testify in November, sorry September 10th, was not a deliberate attempt to undermine the investigation.
In the court filing, Spiro stated that there was no reason to believe such an emergency would reoccur and thus there was no need for further action from the court now. Musk's legal team maintained that his absence on the original testimony date was unintentional and it was caused by circumstances beyond his control. Yes, he sees investigation into Musk's conduct during the Twitter acquisition as part of a broader legal struggle between the billionaire and the Regulatory agency.
The tensions between Musk and the SEC date back to at least 2018, when the agency sued Musk over his infamous tweet where he claimed he had funding secured to take Tesla private. That tweet led to allegations of market manipulation, resulting in Musk paying a $20 million fine and stepping down as Tesla's chairman. The SE CS current investigation is not Musk's first encounter with the regulator.
Aside from the 2018 lawsuit, the SEC has also scrutinized Musk's statements regarding Tesla's Full Self Driving technology and the use of the company's resources to build a reported glass house for Musk. Now, these past incidents have fueled an already adversarial relationship between Musk and the SEC, with Musk frequently accusing the agency of overreach
and harassment. Now, Musk's legal battles with the SEC are notable not just for their scope, but for the billionaire's often combative approach. Musk has been outspoken in his criticism of the SEC, of course, accusing the agency of unfairly targeting him and his companies. And in the past, Musk has described the SE CS enforcement actions as unjustified and has repeatedly pushed back against what he sees as excessive regulatory scrutiny.
Now, this ongoing Twitter stock investigation is just the latest chapter in a long history of disputes between Musk and the SEC. Central to the SE CS current probe is the question of whether Musk violated security laws when he began acquiring Twitter stock in early 2022. Now, according to U.S. Securities regulations, investors who by 5% or more of a public company are required to disclose their holdings within 10 days.
Musk eventually disclosed that he had accumulated a 9.2% stake in Twitter, but did so after the required time frame. The delay in disclosure has raised concerns that Musk's actions may have been intended to manipulate the market, and in July of 2023, Musk publicly stated that he misunderstood the SE CS disclosure requirements, that the delay in reporting his Twitter stock purchases was a mistake.
However, critics, including Twitter shareholders, have questioned whether this explanation is credible. Some have suggested that Musk's delay in disclosing his stake allowed him to buy more shares at a lower price before the market reacted to the news of his large investment, raising concerns about potential market manipulation. Now, Musk's acquisition of Twitter itself was marked by
significant controversy. After initially offering to buy the company in April of 2022, Musk attempted to back out of deal, citing concerns over the number of fake accounts on the
platform. This led to a protracted legal battle with Twitter's board, which culminated in Musk agreeing to move forward with the acquisition in October of 2022. Now, the $44 billion deal was finalized later that month, with Musk officially taking control of the platform and promptly renaming it X. And since acquiring Twitter, Musk has made a series of sweeping changes to the platform, from altering its content moderation policies to laying off large portions of the
workforce. Changes have drawn both praise and criticism, with some applauding Musk's vision for the platform and others raising concerns about the direction the company is heading under his leadership now. Meanwhile, the legal fallout from the acquisition continues, with the SE CS investigation focusing on Musk's conduct leading up to the takeover.