Elon Musk skipped giving scheduled testimony to the Securities and Exchange Commission in September, and now the SEC is asking a court to make him appear.
The SEC sued Musk in San Francisco federal court, seeking an order to compel the billionaire owner of the social-media platform X and the electric vehicle maker
Tesla
(ticker: TSLA) to appear. The filing said the testimony was in connection with a continuing investigation of potential securities-law violations related to Musk’s purchase of Twitter shares in 2022. He later renamed Twitter as X.
The investigation is also looking at Musk’s statements and SEC filings related to Twitter last year, the SEC said.
“The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation — enough is enough,” said Alex Spiro, Musk’s lawyer, in an email to Barron’s.
The SEC said it sent a subpoena to Musk in May requiring his appearance for testimony at its San Francisco regional office. The two sides agreed to meet on a date in September. Musk first asked to move the date back one day, and didn’t object to the rescheduled meeting until two days beforehand, when he told the SEC he wouldn’t appear.
The SEC said in the court filing that Musk’s reasons for not appearing, including an objection to San Francisco as an appropriate location for testimony, were “spurious.”
X’s headquarters are in San Francisco.
The SEC said it tried to negotiate a new time, including offering to move the location of the testimony to Fort Worth, Texas, nearer to where Musk lives. “These good faith efforts were met with Musk’s blanket refusal to appear for testimony,” the court filing said.
Musk, responding to a post about the SEC’s court filing on X Thursday afternoon, said a comprehensive overhaul of agencies was “sorely needed.”
Earlier this year, a jury found Musk and
Tesla
weren’t liable for misleading investors when Musk posted on Twitter in 2018 that he had “funding secured” to take Tesla private.
Musk and Tesla settled securities fraud charges related to the 2018 tweet with each agreeing to pay $20 million in penalties.
Musk bought Twitter for $44 billion in October 2022. He started buying Twitter shares early in 2022 and disclosed on April 4 that he had amassed a 9.2% stake in the company. A group of shareholders have sued Musk, saying his share purchases had reached the point where he was required to disclose them before April 4.
The Twitter purchase hit Tesla stock. Shares were roughly $328 when he said he made an offer for the social-media platform and about $225 when he closed on his purchase. The stock closed out the year at about $123.
Musk’s management distraction along with large stock sales by him to partially fund the Twitter purchase weighed heavily on the stock.
Shares recovered after Musk stopped selling shares and after he hired Linda Yaccarin as X CEO in May. Shares were about $167 when she was named to the post.
In premarket trading on Friday, after the latest lawsuit, the stock was down 1.6%, to almost $256 a share;
S&P 500
and
Nasdaq Composite
futures are both up about 0.1%.
Friday’s drop is most likely tied to Tesla’s decision to lower prices for its Model 3 and Model Y vehicles in the U.S. The company has cut prices several times this year. It’s a sign of weakening demand that also pressures profit margins.
Write to Liz Moyer at [email protected]
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