Elon Musk, CEO of SpaceX and Tesla and owner of X looks on during the Milken Conference 2024 Global Conference Sessions at the Beverly Hilton in Beverly Hills, California, US, May 6, 2024.
David Swanson | Reuters
The Securities and Exchange Commission has asked a federal judge to punish Elon Musk if he continues to violate a court order to appear for a subpoena regarding his acquisition of Twitter in 2022.
The SEC was investigating whether Musk or another associate committed securities fraud in 2022 Tesla The CEO sold shares in his automaker and became involved in Twitter, before his purchase of the company now known as iX.
In May, the court ordered Musk to appear for depositions by financial regulators regarding the Twitter deal.
“Musk has now failed to appear before the SEC twice: first in September 2023, in defiance of a formal administrative request, and last week, in defiance of an express court order,” SEC attorney Robin Andrews said in a Friday filing.
Andrews asked the judge to consider sanctions if Musk delayed, according to the filing.
“The court must make it clear that Musk’s practice of playing games and delays must stop,” Andrews wrote.
The filing also revealed, in a footnote, that the SEC intends to ask the court to hold Musk in “public contempt” by canceling the release on September 10, giving the agency only a few hours’ notice that he would not appear. Musk’s cancellation cost the SEC time and money after it sent staff to Los Angeles to remove him and he failed to appear for investigative interviews, the agency said.
Musk’s deposition in the investigation has been postponed to an early October date at the SEC’s office, the filing said.
“Without further action by the Court, there is nothing to prevent Musk” from “simply failing to show up on that date,” Andrews wrote.
Musk’s lawyer, Alex Spiro, a partner at Quinn Emanuel in New York, wrote in response that “such a drastic action would be inappropriate,” adding that the SEC and Musk had agreed the restructuring would be allowed due to an emergency.
Additionally, Musk and his companies are “cooperating and cooperating with the SEC in other ongoing investigations,” Spiro wrote.
In a separate case, related to the same Twitter deal, the Oklahoma Firefighters Pension and Retirement System sued Musk in federal court in New York accusing him of intentionally concealing his ongoing investment in Twitter and an intention to buy the company.
Lawyers for the pension fund say that Musk, by failing to clearly disclose his investments and intentions to buy Twitter, influenced the decisions of other shareholders and put them at a disadvantage.
Discovery of that lawsuit in New York revealed correspondence between an unnamed person at Morgan Stanley, and Musk’s chief financial officer, Jared Birchall. In the messages, a Morgan Stanley contact wrote in February 2022 that Musk’s plan to buy stock in Twitter was closely watched.
“Nobody knows what’s going on and why except me and you,” wrote someone at Morgan Stanley. “Not compliance, not anyone.”
Read the court order below: