Securities Exchange Commission Seeks Musk Sanctions After Court No-Show

The U.S. Securities and Exchange Commission (SEC) has announced its intention to seek sanctions against Elon Musk following his failure to appear for a scheduled testimony in the agency's ongoing investigation into his $44 billion acquisition of Twitter, now rebranded as X.

On September 20, the SEC filed a motion in a San Francisco federal court, requesting a court order to show cause why Musk should not be held in civil contempt. This action stems from Musk's absence at a testimony session that was mandated by a federal judge earlier this year. The SEC is scrutinizing whether Musk complied with legal requirements when he revealed his acquisitions of Twitter shares and whether his comments regarding the transaction were deceptive.

The testimony was originally scheduled for September 10, with SEC attorneys traveling to Los Angeles for the session. However, just three hours before the scheduled start, Musk's attorney informed the SEC that Musk needed to make an urgent trip to the East Coast for the Polaris Dawn mission launch, rendering him unable to attend or reschedule for the next day. This last-minute notification came despite SpaceX having already announced the launch targeting the morning of the same day, two days prior to the scheduled testimony.

The SEC contends that Musk breached a court directive that required him to 'seek written consent from the SEC or a court order' to change the date of his testimony, which he allegedly failed to do before missing the September 10 appearance. The SEC described Musk's justification as a "strategic maneuver," highlighting that as the Chief Technical Officer of SpaceX, Musk must have been aware of the launch schedule well in advance.

The agency noted in the filing that Musk's late notification caused significant expenses for the SEC, as three attorneys had already traveled to Los Angeles for the testimony. The SEC also pointed out that Musk has previously resisted calls to testify again in this investigation, asserting that he has already done so on two occasions.

In response, Musk's legal team argued that "court intervention is unnecessary, as the parties have already settled on a new testimony date in early October." They emphasized that Musk is under a directive from the court to appear 'unless there is an emergency that he did create and could not avoid'.

The SEC has requested that the court impose 'significant conditional relief' if Musk fails to appear at the new testimony date in October. Additionally, the SEC plans to file a motion for sanctions against Musk to recover travel costs incurred due to the canceled testimony, along with seeking other forms of relief.

This development marks another instance in the ongoing tension between Musk and the SEC, which dates back to 2018 when the agency sued him for misleadingly tweeting that he had 'secured' funding to take Tesla private.