Musk’s attorney labeled the SEC’s move as “drastic” and unnecessary.
As the U.S. Securities and Exchange Commission (SEC) considers imposing sanctions on Elon Musk for missing a court-ordered deposition regarding his $44 billion acquisition of Twitter, the billionaire is coming under fire.
The regulatory body announced on Friday its intention to seek sanctions against Musk after he canceled his scheduled testimony just three hours before it was set to take place on September 10, Reuters reported.
In a federal court filing in San Francisco, the SEC said it would ask for an order requiring Musk to provide justification for why he should not be found in civil contempt for his failure to show up.
Musk’s Last-Minute Decision to Skip Violates Court Order
According to the agency, Musk’s abrupt decision to forego the deposition violated a court order dated May 31 that required him to testify.
Musk, the CEO of SpaceX and Tesla, was in Cape Canaveral, Florida, on the day of the absentee testimony, supervising the launch of SpaceX’s Polaris Dawn mission.
The SEC maintains that, given the company’s internal discussions two days prior, Musk would have known about the planned launch well in advance, despite his position as chief technical officer of SpaceX.
Robin Andrews, the regulator’s attorney, called Musk out for “gamesmanship” and urged the court to stop using such strategies.
“Musk’s excuse itself smacks of gamesmanship,” Andrews wrote in the filing. “The court must make clear that Musk’s delay tactics must cease.”
Musk’s lawyer, Alex Spiro, called the SEC’s action “drastic” and pointless.
He maintained that the testimony has already been rescheduled for October 3 and that Musk’s presence was essential to the astronauts’ safety on the mission.
Spiro argued that there was no indication that the failure to testify would occur again and that it was the result of a “emergency.”
Though it stated in its filing that there is no guarantee Musk will show up for the rescheduled testimony on October 3, the SEC has declined to comment further on the case.
SEC Investigates Musk
The main focus of the investigation is whether Musk broke any securities laws by failing to disclose his early 2022 acquisition of Twitter stock.
Securities laws require investors to make disclosures as soon as they acquire 5% of a publicly traded company.
Musk faced criticism for deceiving investors by holding off on disclosing his 9.2% Twitter stake.
Since then, he has claimed that the delay was the result of a “mistake” in understanding the disclosure requirements.
Musk and the SEC have already clashed once before.
He paid a $20 million fine and gave up his position as chairman of Tesla in order to resolve a lawsuit he had filed in 2018 over tweets he had made about taking the company private.
The SEC has been under increasing fire in the meantime for its “regulation-by-enforcement” strategy toward the cryptocurrency sector.
Opponents claim that the SEC has not created a clear regulatory framework for cryptocurrencies and has instead chosen to take legal action against major participants in the market.
As reported, a coalition of seven U.S. states has come together to challenge the Securities and Exchange Commission’s (SEC) regulation of cryptocurrency.