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.