Elon Musk, the Chief Executive Officer of SpaceX and Tesla, and owner of X, attended the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, on May 6, 2024, as noted by Reuters photographer David Swanson.
The Securities and Exchange Commission (SEC) has requested that a federal judge sanction Elon Musk if he continues to defy a court order to appear for a deposition related to his 2022 acquisition of Twitter. The SEC is probing whether Musk or his associates committed securities fraud during that period, specifically when the Tesla CEO sold shares in his automaker to secure a stake in Twitter before his leveraged buyout of the company, now named X.
In May, the court directed Musk to appear for a deposition by financial regulators regarding the Twitter deal. However, according to SEC attorney Robin Andrews, Musk failed to appear before the SEC twice: initially in September 2023, defying a lawful administrative subpoena, and again last week, disregarding a clear court order. Andrews, in a Friday filing, urged the judge to impose sanctions if Musk continued to delay.
Andrews emphasized in the filing that “Musk’s gamesmanship and delay tactics must cease.” The SEC also revealed, in a footnote, plans to ask the court to hold Musk in “civil contempt” for canceling a deposition on September 10 with only a few hours’ notice, which resulted in wasted resources as the SEC had sent personnel to Los Angeles for the investigative interview that Musk did not attend.
Musk’s deposition has been rescheduled for early October at an SEC office. Andrews expressed concerns that “without further action by the Court, nothing deters Musk” from potentially missing the new date.
Responding on behalf of Musk, attorney Alex Spiro, a partner at Quinn Emanuel in New York, argued that “such drastic action would be inappropriate,” highlighting that the SEC and Musk had mutually agreed that rescheduling was acceptable in case of emergencies. Spiro added that Musk and his companies are cooperating with the SEC in several other ongoing investigations.
Separately, in a civil lawsuit related to the same Twitter deal, the Oklahoma Firefighters Pension and Retirement System has accused Musk of deliberately concealing his incremental investments in Twitter and his intention to buy out the company. The pension fund’s attorneys argued that Musk’s failure to disclose his investments and intentions hindered other shareholders’ decision-making, placing them at a disadvantage.
Discovery in the New York civil case revealed correspondence between an unidentified individual at Morgan Stanley and Jared Birchall, the executive managing Musk’s finances. The messages indicated that Musk’s strategy for acquiring Twitter shares was tightly held, with the Morgan Stanley contact noting that no one but them knew what was transpiring.
The court filing, including these exchanges, is available for further review.
