SEC Vs. Elon: Regulator Seeks Further Answers On Twitter Takeover, Musk's Lawyers Say It's 'Harassment'

Elon Musk faces a further court showdown with the Securities and Exchange Commission over its probe into his $44-billion takeover of Twitter.

The SEC is in court Thursday to face a team of Musk’s lawyers as it seeks to force the billionaire owner of Tesla to testify again about his 2022 purchase of Twitter, which he later renamed X.

Lawyers for the regulator will argue the SEC has new documents relating to the takeover and that Musk must answer further questions following his court appearance in July via videoconference, at which he testified regarding documents he had given the SEC.

The SEC then sued Musk in October after he refused to attend a September interview for the Twitter investigation.

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Were Regulatory Filing Procedures Followed?

The markets regulator is investigating whether Musk followed the correct legal procedures in filing the required documents regarding his purchases of Twitter stock and if his statements on the deal were misleading.

On April 4, 2022, Musk filed paperwork to the SEC announcing he’d acquired a 9.2% stake in Twitter 11 days after the regulator’s deadline for such disclosures. In this filing, Musk stated that he would be a passive stakeholder — indicating no interest in taking over the company.

Later in the same month, however, Musk announced plans to buy Twitter for $44 billion. Claiming that Twitter had not fully disclosed the extent of bot activity, he later attempted to wriggle out of the deal, but was subsequently sued to complete the acquisition, which closed in October 2022.

On Thursday, the judge will hear arguments from both sides, and Musk’s lawyers are expected to claim the SEC’s ongoing probe into the billionaire’s activities constitutes harassment.

This follows the October lawsuit, when Musk’s lawyers called the probe “misguided” and then wrote in a November filing: “The SEC’s pursuit of Mr Musk has crossed the line into harassment.”

Previous Musk, SEC Run-Ins

Musk and the SEC have had previous run-ins – the most high profile of which was related to his 2018 tweet saying he had “funding secured” to take Tesla private.

The resulting share price volatility led to claims of misleading investors and prompted a civil suit by the SEC. In settlement, Musk shelled out $20 million in fines and was stripped of his chairmanship over the electric vehicle maker.

In a later class action related to the 2018 tweet, a number of investors sought to claim damages for the money they lost on Tesla following the social media post. A California jury ruled that Musk was not liable for their losses.

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