Elon Musk is currently under investigation by the US Securities and Exchange Commission (SEC) regarding his $44 billion acquisition of Twitter, which he later rebranded as X, it was disclosed on Thursday.
The probe focuses on whether Musk violated federal securities laws in 2022 during his purchase of Twitter stock, as well as the statements and SEC filings related to the acquisition.
In March 2022, Musk acquired a 9.2% stake in Twitter, becoming its largest shareholder. This purchase was not disclosed in an SEC filing until the following month.
Twitter shareholders subsequently sued over the delay in disclosure, but the lawsuit was dismissed.
To avoid a trial that would have forced him to complete the acquisition, Musk bought the remaining Twitter shares in a $44 billion deal, completing the takeover in October 2022.
The SEC’s investigation came to light on Thursday when the agency filed a lawsuit to compel Musk to testify. Musk had previously agreed to testify but later withdrew his consent.
According to the SEC, it issued a subpoena to Musk in May 2023, requiring him to testify at the agency’s San Francisco office.
Musk had initially agreed to appear but later raised “several spurious objections” just two days before his scheduled testimony, refusing to attend. Musk also declined SEC proposals to conduct the deposition in Texas, his legal residence, in October or November.
Among Musk’s objections were claims that the SEC was attempting to “harass” him and that his legal team needed time to review relevant material from a recently published biography of him.
Alex Spiro, Musk’s attorney, stated, “The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation – enough is enough.”
After his stake in Twitter became public, Musk initially accepted and then declined a board seat at Twitter, which would have restricted him from purchasing additional shares.
Following his announcement to acquire the company in late April, he sought to exit the deal, claiming Twitter had not fully disclosed the extent of bot activity on its platform.
The SEC stated it is seeking Musk’s testimony to gather information not currently in its possession that is pertinent to its investigation.
Thursday’s filing marks a continuation of the ongoing conflict between Musk and the SEC, which began with Musk’s 2018 tweet about taking Tesla private and securing funding.
The SEC fined Musk $20 million for misleading investors and forced him to resign as Tesla’s chairman, a penalty Musk later described as “worth it” in subsequent tweets.
Since then, Musk has frequently criticized the SEC, which has launched multiple investigations into him over the years.
In a statement on X, Musk said, “A comprehensive overhaul of these agencies is sorely needed, along with a commission to take punitive action against those individuals who have abused their regulatory power for personal and political gains.”
