Tesla and SpaceX CEO, Elon Musk, has been ordered by a federal judge to testify once again in the US Securities and Exchange Commission’s (SEC’s) probe into his takeover of Twitter, which he later renamed to X.
The judge, U.S. Magistrate Judge Laurel Beeler, also set the deadline for the agreement, mandating Musk and the SEC to decide on the date and location of the interview within a week.
The SEC probe is investigating whether Musk or anybody else committed securities fraud when he began purchasing Twitter stocks in 2022. After he had gradually built a stake in Twitter, Musk eventually proceeded to acquire the company in a $44 billion leveraged buyout.
Musk Evaded Previous Attempts by the SEC to Get His Testimony
Musk’s battle with the SEC is not new. He previously evaded the SEC’s attempt to get his testimony when he refused to attend an interview in September 2022. He also went on to accuse the commission of harassment, stating that he had already testified twice.
The probe intends to find out if any of Musk’s statements in the paperwork were misleading.
The argument, however, was rejected by Beeler. The judge confirmed the SEC’s broad investigative powers and ruled that it had the authority to issue a subpoena seeking relevant information.
Following Musk’s refusal to attend the interview, the regulator sued him in October in a bid to compel him into testifying.
Judge Beeler then issued a tentative ruling in December, siding with the SEC and ruling that he must testify for the investigation.
Besides rejecting arguments from Musk’s lawyers that SEC officials aren’t authorized to issue subpoenas, the judge added that an SEC probe wouldn’t be second-guessed by any judge.
The regulator is also investigating whether Musk’s filing of the necessary paperwork regarding his purchases of Twitter stocks was in accordance with the law.
Musk’s Repeated Tussle With the SEC and Other Federal Agencies
Elon Musk’s dispute with the SEC began in 2018 when the latter sued him following his “funding secured” tweet, which referred to a potential plan to turn Tesla into a private company.
The billionaire eventually reached a settlement with the SEC, agreeing that his tweets regarding the EV manufacturer would be vetted by a Tesla lawyer. But, guess what? Musk later breached the provision, resulting in another lawsuit in 2019.
In December 2023, Musk appealed to the US Supreme Court to review the decree and consider whether the SEC overstepped its authority by muzzling his constitutional rights to free speech.
As expected, the appeal was rejected by the three-judge panel, which ruled that Musk couldn’t revisit the agreement simply because he had “changed his mind”.
The SEC isn’t the only federal agency that Musk has tried to challenge or strip of authority. The National Labor Relations Board (NLRB) was sued by SpaceX after filing a complaint against the Musk-led company regarding the firing of certain employees.
Musk’s “behavior in the public sphere is a frequent source of distraction and embarrassment for us”, the letter said, among other things.
The aerospace company had illegally laid off employees who signed an open letter criticizing Musk. In their lawsuit, SpaceX lawyers claimed that the very structure of the NLRB is in violation of the U.S. Constitution.
As you can see, there’s a clear pattern of response from Musk. Instead of answering the allegations, he goes on to question the authority of the agency itself.
It now remains to be seen if Musk and the regulator can reach a consensus on the logistics of the interview. Upon their failure, Magistrate Beeler holds the authority to intervene and decide on their behalf after hearing from both parties.