The U.S. Securities and Exchange Commission (SEC) is taking steps to compel Elon Musk, the CEO of Tesla, to testify regarding his Twitter stock purchases. The SEC is investigating whether Musk violated securities laws by purchasing Twitter shares before acquiring the social media platform, which he has since renamed X.
Key Takeaway
The SEC is seeking Elon Musk’s testimony as part of its investigation into his Twitter stock purchases.
Musk’s Alleged Violations
The SEC’s investigation revolves around whether Musk engaged in insider trading, market manipulation, or violated fair market disclosure regulations. Buying Twitter stock before completing the acquisition could potentially be seen as an improper use of inside information.
SEC’s Request for Musk’s Testimony
In an official filing with a federal court in San Francisco, the SEC stated that Musk failed to appear for a requested testimony last month. The agency is scrutinizing Musk’s statements and disclosures related to the stock transactions. Since April 2022, Musk has already provided hundreds of documents and testified twice in July 2022.
The SEC had arranged an interview with Musk in San Francisco for September 15, 2022, but he objected, asserting that San Francisco jurors hold a negative opinion of him. The agency proposed relocating the interview to Fort Worth, Texas, where Musk lives, but he declined to meet at any location.
Prior Issues with the SEC
This is not the first time Musk has had a conflict with the SEC. In 2018, Musk was ordered to have his Tesla-related tweets reviewed by a lawyer after he tweeted about having “funding secured” to take Tesla private at $420 per share. The SEC investigated whether this constituted securities fraud.
The SEC is also currently investigating Musk and Tesla over their claims about “full self-driving” capabilities in Tesla vehicles. Additionally, they are examining the use of company funds to construct a “glass house” for Musk.
The SEC’s investigation into Musk’s Twitter stock purchases is ongoing and nonpublic, leaving the final outcome yet to be determined.
