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Regulatory Scrutiny Surrounds $44 Billion Acquisition
The U.S. Securities and Exchange Commission (SEC) has formally launched an investigation into Elon Musk regarding his high-profile $44 billion social media giant Twitter takeover, as disclosed on Thursday. The probe is centered on potential violations of federal securities laws during Musk’s acquisition of Twitter shares in 2022, which he later rebranded as “X,” as well as his statements and SEC filings related to the transaction.
In March 2022, Elon Musk acquired a 9.2% stake in Twitter, eventually becoming the company’s majority shareholder. Interestingly, the purchase was not disclosed in an SEC filing until the subsequent month. In response to this delayed disclosure, Twitter shareholders initiated legal action, although their lawsuit was later dismissed. Faced with a trial that sought to compel him to complete the acquisition, Musk ultimately purchased the remaining Twitter stock, completing the $44 billion deal and assuming control of the company in October 2022.
The revelation of the SEC’s investigation came to light when the U.S. regulatory agency sued Elon Musk to compel his testimony in their ongoing inquiry, which Musk had previously agreed to provide but later withdrew from.
The SEC is suing Elon Musk for refusing to testify in Twitter investigation https://t.co/OdO8TZueWz pic.twitter.com/VLHiqmhBvJ
— Engadget (@engadget) October 5, 2023
The SEC disclosed that it had issued a subpoena to Musk in May 2023, mandating his testimony at the agency’s San Francisco office. Musk had initially agreed to appear for testimony last month. However, just two days before the scheduled testimony, Musk raised a series of objections, leading to his refusal to appear. Among his objections were claims that the SEC was attempting to “harass” him and that his legal counsel required additional time to review potentially pertinent material contained in a recent biography of Musk published the previous month.
Attorney Alex Spiro, representing Elon Musk, stated, “The SEC has already taken Mr. Musk’s testimony multiple times in this misguided investigation — enough is enough.”
Elon Musk’s relationship with the SEC has been characterized by ongoing tensions, dating back to his 2018 tweet in which he claimed to have secured funding to take Tesla private, resulting in a $20 million fine and his removal as chairman of Tesla. Since then, Musk has frequently criticized the SEC, while the agency has conducted multiple investigations into Musk’s actions.
The SEC stated that it is pursuing Musk’s testimony to obtain additional information that is pertinent to its legitimate and lawful investigation.
