The U.S. Securities and Exchange Commission said on Friday it intends to impose sanctions on Elon Musk as it investigates his $44 billion acquisition of Twitter after he failed to testify as required by a court.
The sanctions motion will seek an order to show why Musk should not be held in contempt of court for saying he would not appear three hours before a scheduled Sept. 10 deposition, the SEC said in a filing in federal court in San Francisco.
Musk, the world’s richest man and owner of electric car maker Tesla and rocket company SpaceX, among other businesses, was in Cape Canaveral, Florida, to oversee the launch of SpaceX’s Polaris Dawn rocket.
But the SEC said Musk, as SpaceX’s chief technology officer, “must have known” about the launch because the company discussed it two days earlier. It said Musk’s actions violated a May 31 court order compelling him to testify.
“Musk’s defense itself smacks of manipulativeness,” wrote SEC lawyer Robin Andrews. “The court must make clear that Musk’s manipulativeness and delaying tactics must stop.”
Musk’s lawyer, Alex Spiro, called the sanctions “overly harsh” and unnecessary and said Musk’s absence from the launch could endanger the lives of the astronauts. His testimony has been rescheduled for Oct. 3.
Spiro wrote that Musk failed to testify on September 10 because of an “emergency” that he did not cause and “there is no reason to believe such an emergency will occur again.”
An SEC spokesman declined to comment, but the regulator said in court filings that there was nothing to prevent Musk from appearing in absentia on Oct. 3.
The U.S. Securities and Exchange Commission is investigating whether Musk violated securities laws when he began to build up his stake in Twitter in early 2022.
Musk was criticized, including by Twitter shareholders, for waiting at least 10 days to disclose his purchase of Twitter stock.
Disclosure is required when an investor owns 5% of a public company. Musk eventually disclosed a 9.2% stake in Twitter and soon offered to buy the entire company.
In July, Musk said he had misunderstood the SEC’s disclosure requirements and that “all indications” were that his delay was a “mistake.”
Last October, he missed a scheduled interview at the San Francisco office and was sued by the Securities and Exchange Commission.
Musk said the SEC was trying to “harass” him with the subpoena.
He has a long-standing feud with the U.S. Securities and Exchange Commission (SEC), including being sued by the SEC in 2018 over comments he posted on Twitter about taking Tesla private.
Musk settled the lawsuit by paying a $20 million fine, agreeing to have Tesla lawyers review some posts in advance, and giving up his position as Tesla chairman.
