The peculiar purchase operation of Twitter continues to haunt Elon Musk one year after the closing of the operation. The United States Securities and Exchange Commission (SEC) has filed a request to order the tycoon to comply with an investigative subpoena requesting his appearance to provide testimony, which Musk has not complied with.
The 16-page request, filed in federal court in San Francisco, where X, Twitter’s new name, is based, the subpoena for Musk to testify refers to an ongoing SEC investigation into the purchase operation of the publicly traded company. The supervisor is investigating possible violations of various provisions of the federal securities laws in connection with Musk’s 2022 purchases of Twitter shares and Musk’s own SEC statements and official communications regarding the social network.
The SEC notes that it is seeking Musk’s testimony to obtain information that is not already in the supervisor’s possession and that is relevant to its investigation. If a person or entity refuses to comply with a subpoena issued by SEC law enforcement personnel pursuant to a formal investigative order, the Commission may file an action in federal district court seeking an order that force compliance.
In its brief, the SEC states that Musk did not appear to testify as required by the investigative subpoena that had been delivered to him despite having agreed to do so and until having set a date last September. Since he received the subpoena in May, he did not raise any objections until two days before he was scheduled to testify, when Musk notified the SEC that he would not appear. According to the SEC document, Musk attempted to justify his refusal to comply with the subpoena by raising, for the first time, “several spurious objections, including an objection to San Francisco as an appropriate location to testify.” The petition asks for a court order ordering Musk to comply with the subpoena.
What the document does not reveal precisely are the specific infractions for which Musk is being investigated, although there is already some prior information in this regard. In May of last year, the SEC published a letter in which he asked for explanations for belatedly announcing that it had acquired a significant stake in Twitter.
In addition, the SEC questioned whether Musk declared himself a passive investor in the company. The world’s richest man later amended his communication to the supervisor by saying that he intended to be an active investor. It is also in doubt whether Musk correctly communicated the steps he was taking with respect to the company. He began to question his willingness to buy the company through tweets without making any official communication. In June, The supervisor sent him another letter with questions about it.
In that new letter, dated June 2, 2022, the SEC told Musk: “We note that on May 17, 2022, Elon R. Musk addressed the pending acquisition of Twitter and publicly stated via his Twitter that ‘this deal cannot move forward.’ The term ‘cannot’ suggests that Mr. Musk and his partners are exercising the legal right under the terms of the merger agreement to suspend the closing of the Twitter acquisition or otherwise do not intend to complete the acquisition. However, we note that Annex 13D has not been modified to reflect the apparent relevant change that has occurred in the facts previously reported in point 4 of Annex 13D. Please provide us with a written analysis in support of any conclusion that an amendment is not required.”
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