### Elon Musk Faces Possible Sanctions Amid SEC Investigation into Twitter Acquisition
Elon Musk
SEC
Twitter
Musk’s attorney has described the SEC’s actions as “drastic” and unwarranted.
**Last updated:** September 21, 2024, 03:14 EDT
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Elon Musk is currently under investigation as the U.S. Securities and Exchange Commission (SEC) seeks to impose sanctions due to his absence from a court-mandated deposition regarding his $44 billion purchase of Twitter.
On Friday, the SEC announced its plan to pursue sanctions against Musk after he canceled his scheduled testimony just three hours before it was due to occur on September 10, according to reports from Reuters.
In its filing with a federal court in San Francisco, the SEC indicated it would request an order compelling Musk to explain why he should not be held in civil contempt for failing to appear.
#### Musk’s Last-Minute Absence Breaches Court Order
The agency claims that Musk’s late decision to skip the deposition was a violation of a court order issued on May 31, which mandated his testimony. On the day he was supposed to testify, Musk was at Cape Canaveral in Florida, overseeing the launch of SpaceX’s Polaris Dawn mission.
Despite his responsibilities as SpaceX’s chief technical officer, the SEC asserts that Musk had prior knowledge of the launch, given internal discussions held two days earlier.
Robin Andrews, the SEC’s attorney, accused Musk of employing “gamesmanship” and urged the court to prevent such tactics. “Musk’s excuse reeks of gamesmanship,” Andrews stated in the filing. “The court must clarify that Musk’s delay tactics will not be tolerated.”
In response, Musk’s attorney, Alex Spiro, criticized the SEC’s actions as “drastic” and unnecessary. He emphasized that Musk’s presence was essential for the safety of the astronauts involved and noted that the deposition has been rescheduled for October 3. Spiro argued that the absence was due to an “emergency” and that there is no indication it will recur.
The SEC has not provided further comment on the matter but highlighted in its filing that there are no guarantees Musk will attend the rescheduled deposition on October 3.
#### SEC Investigates Musk
The investigation focuses on whether Musk violated securities laws by failing to timely disclose his initial acquisition of Twitter stock in early 2022. Under securities regulations, investors are required to disclose their ownership once they acquire 5% of a public company.
Musk delayed announcing his 9.2% stake in Twitter, leading to allegations of misleading shareholders. He has since claimed that the delay resulted from a misunderstanding of the disclosure requirements, referring to it as a “mistake.”
This is not Musk’s first encounter with the SEC. In 2018, he settled a lawsuit concerning tweets about taking Tesla private, agreeing to a $20 million fine and stepping down as Tesla’s chairman.
Simultaneously, the SEC faces increasing criticism for its “regulation-by-enforcement” strategy within the crypto sector. Critics contend that the SEC has not established a clear regulatory framework for cryptocurrencies and has instead opted to pursue legal actions against significant industry figures.
A coalition of seven U.S. states has reportedly united to challenge the SEC’s regulation of cryptocurrency.
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