SEC Requests Sanctions Against Elon Musk Over Deposition Nonappearance
The Securities and Exchange Commission (SEC) has requested a federal judge to impose sanctions on Elon Musk, if he continues to defy the court’s order to appear for a deposition regarding his 2022 acquisition of Twitter. This inquiry is part of an ongoing investigation into potential securities fraud committed by Musk or associates during the transaction.
The SEC is examining the Tesla CEO’s actions, particularly the sale of shares in his automaker and the acquisition of a substantial stake in Twitter ahead of his leveraged buyout of the social media company, now named X.
In May, the court mandated Musk to give a deposition to financial regulators about the Twitter deal. However, SEC attorney Robin Andrews indicated in a Friday filing that Musk has failed to appear twice: once in September 2023, ignoring a lawful administrative subpoena, and again last week, defying a clear court order.
Robin Andrews urged the court to consider sanctions if Musk continues to postpone appearances, emphasizing that the court needs to ensure Musk’s delay tactics and noncompliance cease immediately. The filing mentions that the SEC plans to ask the court to hold Musk in "civil contempt" for cancelling a September 10 deposition at short notice, which resulted in significant resource losses for the SEC.
The deposition has been rescheduled for early October at an SEC office. Andrews noted that additional court intervention is necessary to prevent Musk from simply not showing up again.
In response, Musk’s attorney, Alex Spiro of Quinn Emanuel, argued that such severe actions would be inappropriate, stating that the SEC and Musk had agreed that rescheduling was acceptable due to an emergency. Spiro also highlighted that Musk and his companies have been cooperating with the SEC in several ongoing investigations.
Additionally, a civil lawsuit filed by the Oklahoma Firefighters Pension and Retirement System in a federal court in New York alleges that Musk deliberately concealed his investments in Twitter and his intent to purchase the company. The lawsuit claims that Musk’s non-disclosure influenced other shareholders’ decisions, putting them at a disadvantage.
Documents from this New York case revealed correspondence between an individual at Morgan Stanley and Jared Birchall, the executive managing Musk’s finances. In the messages dated February 2022, the Morgan Stanley contact stated that Musk’s stock-buying strategy for Twitter was highly confidential, known only to the two of them and excluding even compliance teams.
