Elon Musk and SEC Set for Court Battle Over Twitter Testimony

Elon Musk, the CEO of Tesla and SpaceX, is set to face the U.S. Securities and Exchange Commission (SEC) in a San Francisco court over his $44 billion acquisition of Twitter. The legal confrontation revolves around the SEC’s demand for Musk to provide additional testimony as part of its investigation into the takeover.

Background of the Case

The SEC initiated its investigation after Musk disclosed in April 2022 that he had acquired a 9.2% stake in Twitter. This disclosure came 11 days past the SEC’s deadline for such announcements. Initially, Musk indicated he would be a passive stakeholder, but later in the month, he announced plans to buy Twitter for $44 billion. This acquisition was finalized in late October 2022 after a series of legal and operational hurdles.

SEC’s Allegations and Musk’s Response

The SEC’s probe aims to determine whether Musk adhered to legal requirements when filing paperwork about his Twitter stock purchases and if his statements regarding the deal were misleading. Musk previously cooperated with the SEC, providing documents for the probe and testifying via videoconference in July. However, he refused to attend a follow-up interview scheduled for September, prompting the SEC to file a lawsuit in October to compel his testimony.

Musk’s legal team has pushed back against the SEC’s demands, labeling the probe as harassment and arguing that individual SEC attorneys lack the authority to issue subpoenas for testimony. They have urged U.S. Magistrate Judge Laurel Beeler to reject the SEC’s request.

Upcoming Court Hearing

The court hearing is the latest chapter in a long-standing dispute between Musk and the SEC, dating back to Musk’s 2018 tweet about having “funding secured” to take Tesla private. The hearing, scheduled for 9:30 a.m. PST on a Thursday, will have both parties present their arguments. The SEC must demonstrate that its probe falls within its authority, adheres to procedural requirements, and seeks evidence that is relevant and material.

Legal experts anticipate that the judge might side with the SEC, although some conditions could be imposed.

Implications of the Case

This legal battle is significant as it showcases the ongoing tension between one of the world’s most prominent entrepreneurs and the top U.S. markets regulator. It also highlights the complexities surrounding corporate disclosures, stock market regulations, and the conduct of high-profile business leaders in the public domain.