Elon Musk faces potential sanctions from US SEC

The US Securities and Exchange Commission (SEC) is seeking sanctions against Elon Musk for failing to appear for court-ordered testimony regarding his $44 billion acquisition of Twitter. Musk, citing the need to oversee SpaceX’s Polaris Dawn mission launch, notified the SEC just hours before the scheduled testimony on 10 September that he would not attend. The SEC, however, contends Musk was aware of the launch in advance and accused him of employing delay tactics, as his absence violated a May court order.

Musk’s legal team defended his actions, stating that his presence was critical for the safety of the astronauts, and rescheduled the testimony for 3 October. They argue that the situation was an emergency that Musk had not created and believe that further sanctions are unnecessary. However, the SEC remains sceptical, warning that Musk’s failure to appear in October could result in additional legal action.

Why does this matter?

The ongoing SEC investigation focuses on whether Musk violated securities laws in early 2022 when he delayed disclosing his purchase of Twitter stock after reaching a 5% ownership threshold. Musk eventually revealed a 9.2% stake and made a bid for the company. Despite his claim of misunderstanding disclosure rules, the SEC continues to scrutinise his actions, reflecting Musk’s long-standing clashes with the regulator, which began with a 2018 lawsuit over tweets about taking Tesla private.