A federal judge in San Francisco told the legal team of Elon Musk on Thursday that the billionaire must testify again as part of the US Securities and Exchange Commission (SEC) investigation of his $44 billion (€40 billion) buyout of the social media website Twitter, since rebranded as X.
US Magistrate Judge Laurel Beeler stopped short of ordering Musk to testify, but she rapidly rejected arguments from his attorney that SEC officials lacked the authority to issue subpoenas.
Beeler said the US agency, charged with enforcing laws against stock market manipulation, among others, had broad investigative powers and that no judge would “second guess” an SEC probe.
She called on Musk and the SEC to agree to a date for another day’s testimony in the case, adding that she would set one for them if they did not.
“You’ve got one more four-hour deposition, one more day of depositions to survive and it’s over,” she said. “It seems unlikely there’s going to be any more hassle.
“If you don’t work it out, then it’s in San Francisco in February,” Beeler said.
What’s the SEC case against Musk about?
The SEC opened an investigation into Musk’s 2022 purchase of Twitter last April after he first disclosed he had purchased stock in the company.
It’s probing whether Musk followed the law when filing the paperwork required for the takeover and whether his public comments about the purchase were misleading.
Musk had initially implied he planned to be a passive stakeholder in the company, then switched to bidding for a full takeover, then ultimately completed the deal by October 2022 after trying to pull out of the purchase.
Musk testified twice as part of the investigation via video link in July 2022, as well as providing documents at the SEC’s request.
But the SEC said in October that Musk had refused to attend another interview this September, which it had called for after receiving new documents.
It sought a court order to compel him to testify, and Musk’s legal team, in turn, urged the court to overturn the appeal, saying “the SEC’s pursuit of Mr. Musk has crossed the line into harassment.”
Latest of several clashes between Musk, SEC
Musk and the SEC have locked horns several times in recent years, with the billionaire frequently alleging that the watchdog has employed dubious methods against him.
The most famous case pertained to Musk’s 2018 public claim that he had “funding secured” to take electric carmaker Tesla private. No such deal ultimately emerged, but the comments led to volatile Tesla share prices and complaints of unfair losses from investors. In a civil lawsuit, though, a jury found Musk was not liable for investor losses.
The SEC and Musk ultimately settled in the case, with an agreement for him to pay some $20 million and to have lawyers vet some of Musk’s future social media posts about Tesla.
However, Musk has since alleged the deal was made under duress, claiming the SEC exploited Tesla’s liquidity needs at the time to strong-arm him into submission.
The SEC accused Musk in 2019 of violating the terms of the agreement.
In May, Musk lost an appeals court case seeking to remove what he called the “muzzling” of his free speech, but he could yet try to take the issue to the Supreme Court.
Over the years, the SEC has also opened several other cases against Musk and Tesla.
msh/sms (AP, Reuters)