SEC initiates legal action against Elon Musk over Twitter stock disclosures SEC initiates legal action against Elon Musk over Twitter stock disclosures
The regulator said the billionare failed to honor a subpoena that has been served since May.
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Updated: Oct. 5, 2023 at 9:56 pm UTC
NORAD and USNORTHCOM Public Affairs / Public Domain.
The U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against Elon Musk due to his non-compliance with a subpoena. The financial authority is investigating whether the billionaire violated federal securities law with his Twitter purchase last year.
The SEC stated that Musk failed to appear to testify last month as requested despite having been served the subpoena since May. According to the regulator, it needs Musk’s testimony to obtain information relevant to its legitimate and lawful investigation.
The SEC’s application for an order, filed in the U.S. District Court for the Northern District of California, relates to an ongoing investigation into potential violations of federal securities laws. Musk’s 2022 acquisitions of Twitter stock and his corresponding statements and SEC filings are under scrutiny. The SEC seeks Musk’s testimony to uncover information relevant to its lawful investigation, information that isn’t in the SEC’s possession currently.
Musk’s failure to comply with the subpoena is noteworthy given that he had agreed to testify in the SEC’s San Francisco Regional Office on a mutually agreed date in September 2023, and had been served with the subpoena in May 2023. Musk raised no objections until two days before his scheduled testimony, when he informed the SEC of his non-attendance, offering several objections for the first time.
The regulatory body filed the matter at a federal district court, examining Musk’s statements and disclosures about stock transactions linked to the social media platform. While the SEC continues its fact-finding investigation, the application for an order compelling Musk’s compliance is still pending the court’s ruling.
Musk has ambitious plans for the company now branded as X, including building it into a financial institution. However, he did not clarify whether Twitter’s payment features might involve cryptocurrency, despite hinting at possible Dogecoin payment options in April 2022.
With Musk’s intentions for Twitter’s financial transformation under the spotlight, his unfulfilled commitment to the SEC now links the future of his digital ambitions with the ongoing securities investigation. As such, the wider implications of this development on both the tech and financial industries remain to be seen.
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X
X (formerly Twitter) is an American social media company based in San Francisco, California, that was founded by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams in March 2006 and was launched July of the same year.
South African-born Elon Musk has founded several companies, including X.com (which later became PayPal), SpaceX and Tesla Motors.