A federal judge in San Francisco tentatively ruled on Thursday that billionaire Elon Musk must testify again for the US Securities and Exchange Commission's investigation into his $44 billion takeover of Twitter. US Magistrate Judge Laurel Beeler swiftly rejected arguments from Musk's attorney that SEC officials lacked the authority to issue subpoenas, stating that the agency has wide-ranging investigative powers and that no judge would "second-guess" an SEC probe.
She stated that Musk and the SEC needed to agree on a date for the world's richest person to testify again, or she would schedule the date herself.
"You have one more four-hour deposition, one more day of depositions to endure, and then it's finished. It appears that there won't be any more trouble," she remarked.
In October, the SEC filed a lawsuit against Musk to force him to testify in an investigation into his 2022 acquisition of social media platform Twitter, which he later renamed X. Musk declined to participate in a September interview for the probe, according to the SEC.
The agency is investigating whether Musk complied with regulations when submitting paperwork to the SEC regarding his purchases of Twitter stock, and whether his statements about the deal were deceptive.
The ongoing court hearing is the latest development in a long-standing conflict between Musk and the top US markets regulator, which began in 2018 after Musk claimed on Twitter that he had "funding secured" to take the electric carmaker private.
The SEC has been investigating Musk's Twitter activities since April 2022, when he first revealed that he bought stock in the company. Musk provided the SEC with documents for its investigation and testified via videoconference for two half-day sessions in July, according to the SEC's filing. The SEC's attorneys stated that they have more questions for Musk after receiving new documents and had requested additional testimony in September, which Musk refused to comply with.
Musks lawyers have urged Beeler to deny the SEC's request in response to the October lawsuit, calling the probe misguided. They argued that individual SEC attorneys do not have the legal authority to issue subpoenas for testimony. The SEC rejected those claims, asserting that agency officials have the legal authority to seek additional testimony as probes evolve. In a filing last month, Musk's lawyers stated, "The SEC's pursuit of Mr. Musk has crossed the line into harassment."
Twitter takeover
On Thursday, Beeler quickly ruled in favor of the SEC, decisively rejecting Musk's lawyers' arguments, while acknowledging that the requirements of lengthy investigations can be "frustrating."
Musk and the SEC have been in ongoing conflict since his "funding secured" tweet in 2018. The SEC settled that case but later sued Musk again in 2019 for allegedly violating the settlement. The tweets also led to a lawsuit from shareholders. In February, a jury found Musk not liable for misleading investors.
Throughout the years, the agency has launched numerous other investigations into Musk and Tesla.
On April 4, 2022, Musk revealed that he had purchased a 9.2% stake in Twitter, which was 11 days after the SEC's disclosure deadline. In his initial regulatory filing, Musk stated that he intended to be a passive investor and had no plans to take control of the company.
However, later in the month, he made public his intentions to acquire Twitter for $44 billion. Subsequently, he attempted to withdraw from the deal, claiming that Twitter had not fully disclosed the extent of bot activity on its platform.
After being sued to complete the deal, Musk closed his acquisition of Twitter in late October 2022.
