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Elon Musk is butting heads with the US Securities and Exchange Commission again, but this time, it is different, as the billionaire is trying to avoid the SEC subpoena.
The regulator announced legal action on October 5, trying to force Musk to comply with a subpoena and provide his testimony regarding the acquisition of X (formerly Twitter). However, the Tesla and SpaceX CEO has been trying to avoid the order since he received the subpoena in May.
In its new announcement, the SEC says: “If a person or entity refuses to comply with a subpoena issued by SEC enforcement staff under a formal order of investigation, the Commission may file a subpoena enforcement action in federal district court seeking an order compelling compliance.”
If Musk fails to comply with the previous order, he could face real consequences this time. As for why the SEC is looking into the acquisition of Twitter, the SEC’s new announcement also says:
According to the SEC staff’s filing in the U.S. District Court for the Northern District of California, the testimony subpoena to Musk relates to an ongoing investigation by the SEC regarding, among other things, potential violations of various provisions of the federal securities laws in connection with (a) Musk’s 2022 purchases of Twitter, Inc. (“Twitter”) stock, and (b) Musk’s 2022 statements and SEC filings relating to Twitter.
Experts Agree that Musk Has No Way to Avoid the Order
Musk did not just ignore the order but attempted to object to it a few days before a September hearing date. He did not attend the hearing, although it remains unclear whether he seeks to resist the SEC. Even if this is the case, experts believe that his chances of doing it successfully are slim and that Musk must comply before long.
Elon Musk was given four months notice when served with a subpoena to testify. He said he’d be there.
Then at the last minute, he started making excuses.
When the SEC accommodated him by offering to let him testify any time and any place he wanted…
He just flat out refused. pic.twitter.com/KKIBP5IlIN
— ClearingTheFog (@clearing_fog) October 5, 2023
Davis Wright Tremaine’s partner, Stephen Crimmins, spoke to Reuters, saying that this case differs from the billionaire’s past clashes with the SEC, as the law provides the regulator with subpoena power to take investigative testimony and gather documents.
Simply put, the SEC has taken an earnest approach, leaving Musk without many options.
He can expect hefty fines or even a jail sentence if he fails to comply, although this would likely only come under extreme circumstances.
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