Elon Musk is under scrutiny as the US Securities and Exchange Commission (SEC) seeks to impose sanctions against him after he failed to attend a court-ordered deposition in connection with the 44 billion USD acquisition of Twitter.
The regulator announced on Friday its intention to impose sanctions on Musk after he canceled his Sept. 10 testimony just three hours before it was scheduled, Reuters reported.
The SEC’s motion, filed in federal court in San Francisco, says it will seek an order requiring Musk to explain why he should not be held in civil contempt for his failure to appear.
Musk’s last-minute decision to skip school violates court order
The agency argues that Musk’s last-minute decision to skip the interview violates a May 31 court order compelling his testimony.
On the day of the missed testimony, Musk, who heads Tesla and SpaceX, was in Cape Canaveral, Florida, to oversee the launch of SpaceX’s Polaris Dawn mission.
Despite his role as SpaceX’s chief technical officer, the SEC alleges that Musk knew about the planned launch two days earlier, given the company’s internal discussions.
The regulator’s lawyer, Robin Andrews, accused Musk of engaging in “games” and asked the court to put a stop to such tactics.
“Musk’s excuse itself smacks of a gimmick,” Andrews wrote in the complaint. “The court must make clear that Musk’s delaying tactics must stop.
Alex Spiro, Musk’s lawyer, called the SEC’s move “drastic” and unnecessary.
He argued that Musk’s presence was critical to the safety of the astronauts involved in the mission and that testimony has already been rescheduled for October 3.
Spiro claimed that the failure to testify was due to an “emergency” and there is no indication that it would happen again.
The SEC has not commented further on the case, but noted in its filing that there is no guarantee that Musk will appear for the deposition, which has been rescheduled for October 3.
SEC investigates Elon Musk
The investigation focuses on whether Musk violated securities laws by failing to timely disclose his initial accumulation of Twitter shares in early 2022.
Securities laws require investors to make disclosures once they own 5% of a publicly traded company.
Musk delayed disclosing his 9.2% stake in Twitter, leading to accusations of misleading shareholders.
He has since argued that the delay was a misunderstanding of disclosure rules, calling it a “mistake.”
This is not the first time Musk has clashed with the SEC
In 2018, he settled a lawsuit over tweets about Tesla’s privatization, agreeing to pay a $20 million fine and resign his role as Tesla’s chairman.
Meanwhile, the SEC is facing growing criticism for its regulation-by-enforcement approach to the crypto industry.
Critics argue that the SEC has failed to create a clear regulatory framework for cryptocurrencies and has instead chosen to take legal action against major players in the industry.
As reported, a coalition of seven US states has joined forces to challenge the Securities and Exchange Commission’s (SEC) regulation of cryptocurrencies.
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