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Elon Musk is currently facing scrutiny as the U.S. Securities and Exchange Commission (SEC) seeks to impose penalties following his absence from a court-ordered deposition concerning his $44 billion acquisition of Twitter.
The regulatory agency announced on Friday its plan to pursue sanctions against Musk after he canceled his scheduled testimony just three hours prior to its occurrence on September 10, according to a report by Reuters.
The SEC’s submission in a federal court in San Francisco indicated that it would seek an order requiring Musk to clarify why he should not be held in civil contempt for not appearing.
Musk’s Last-Minute Decision to Skip Violates Court Order
The agency contends that Musk’s eleventh-hour choice to forgo the deposition breached a court order from May 31 that mandated his testimony.
On the day he missed the testimony, Musk, who heads Tesla and SpaceX, was at Cape Canaveral in Florida to oversee the launch of SpaceX’s Polaris Dawn mission.
Despite his position as SpaceX’s chief technical officer, the SEC asserts that Musk would have been aware of the scheduled launch well ahead of time, given the company’s internal discussions two days earlier.
The regulator’s attorney, Robin Andrews, accused Musk of engaging in “gamesmanship” and urged the court to prevent such tactics.
“Musk’s justification itself reeks of gamesmanship,” Andrews stated in the filing. “The court must clarify that Musk’s delay tactics must end.”
Alex Spiro, Musk’s lawyer, described the SEC’s action as “drastic” and unwarranted.
He claimed that Musk’s presence was vital for the safety of the astronauts involved in the mission and noted that the testimony has already been rescheduled for October 3.
Spiro argued that the failure to testify was due to an “emergency” and asserted that there is no indication it would occur again.
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The SEC has not provided additional comments on the matter but mentioned in its filing that there is no assurance Musk will appear for the rescheduled testimony on October 3.
SEC Investigates Musk
The investigation focuses on whether Musk breached securities laws by failing to timely disclose his initial acquisition of Twitter stock in early 2022.
Under securities regulations, investors are required to disclose once they own 5% of a public company.
Musk delayed announcing his 9.2% stake in Twitter, resulting in allegations of misleading shareholders.
He has since claimed that the delay stemmed from a misunderstanding of the disclosure requirements, referring to it as a “mistake.”
This is not the first instance of Musk encountering issues with the SEC.
In 2018, he settled a lawsuit regarding tweets about taking Tesla private, agreeing to pay a $20 million fine and stepping down as Tesla’s chairman.
Meanwhile, the SEC has been facing increasing criticism for its “regulation-by-enforcement” strategy concerning the crypto sector.
Critics assert that the SEC has not established a clear regulatory framework for cryptocurrencies, opting instead to take legal action against significant industry figures.
As reported, a coalition of seven U.S. states has united to contest the Securities and Exchange Commission’s (SEC) regulation of cryptocurrency.
The post Elon Musk Faces Potential Sanctions as SEC Investigates Twitter Purchase appeared first on Cryptonews.
