{"id":70524,"date":"2023-10-09T09:18:23","date_gmt":"2023-10-09T13:18:23","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/sec-sues-elon-musk-to-enforce-testimony-for-twitter-probe\/"},"modified":"2023-10-09T09:18:26","modified_gmt":"2023-10-09T13:18:26","slug":"sec-sues-elon-musk-to-enforce-testimony-for-twitter-probe","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=70524","title":{"rendered":"SEC Sues Elon Musk To Enforce Testimony For Twitter Probe"},"content":{"rendered":"<div>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Key takeaways<\/h2>\n<ul>\n<li>The SEC is suing Elon Musk to testify in its ongoing Twitter probe after he missed a scheduled date<\/li>\n<li>Lawyers for Musk said the investigation is \u201cmisguided\u201d<\/li>\n<li>The news comes as a new investment vehicle from activist investor Bill Ackman could take X public again<\/li>\n<\/ul>\n<p>Can Elon Musk catch a break right now? The U.S. Securities and Exchange Commission (SEC) has sued the billionaire and CEO of X, formerly known as Twitter, to actually turn up to testify in the probe they\u2019ve launched.<\/p>\n<p>The investigation is all about whether any securities laws were broken during Twitter\u2019s sale to Musk, which was a nail-biting time for the company involving a lot of litigation. But it\u2019s just the latest in a long line of bad blood between Musk and the SEC, who have come to blows many times before.<\/p>\n<p>Keep reading to discover why Elon\u2019s pressed about the SEC, the probe into his Twitter takeover and an intriguing rumor that could change the company\u2019s path.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Why is the SEC suing Elon Musk?<\/h2>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>The SEC sued Elon Musk in a San Francisco court on Thursday in a bid to get the Tesla, SpaceX and X CEO to sit down with them and testify about his Twitter acquisition last year.<\/p>\n<p>The investigation itself is about whether any securities fraud happened if anyone bought Twitter shares last year as Elon was buying up stock in the social media platform. Elon failed to show up as a September 15 testimony date, which, obviously, the SEC didn\u2019t appreciate.<\/p>\n<p>The regulatory body claims new evidence has come to light and that while Musk has already testified twice in July 2022, he hasn\u2019t returned since. The SEC also says it\u2019s tried hard to find a time and place where Elon could testify, including the agency\u2019s office in Fort Worth, Texas, which is close to Musk\u2019s Austin home.<\/p>\n<p>\u201cMusk\u2019s ongoing refusal to comply with the SEC\u2019s administrative subpoena is hindering and delaying the SEC staff\u2019s investigation to determine whether violations of the federal securities laws have occurred,\u201d SEC attorneys wrote.<\/p>\n<p>Musk\u2019s people, however, have a different view. His attorney, Alex Spiro, said in a statement that \u201cthe SEC has already taken Mr. Musk\u2019s testimony multiple times in this misguided investigation\u2014enough is enough.\u201d Also, Elon literally used his new biography as a reason not to testify &#8211; take from that what you will. (And no, the SEC didn\u2019t like that excuse.)<\/p>\n<p>A hearing on the probe is set to occur on November 9, though the SEC has said it hasn\u2019t found any violations so far. We\u2019ll find out soon enough whether a judge sides with the regulators or the world\u2019s richest man.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What\u2019s the context behind the SEC Twitter probe?<\/h2>\n<p>Musk had some <a rel=\"nofollow noopener\" href=\"https:\/\/twitter.com\/elonmusk\/status\/1710030124735762891?s=20\" target=\"_blank\" class=\"color-link\" title=\"https:\/\/twitter.com\/elonmusk\/status\/1710030124735762891?s=20\" data-ga-track=\"ExternalLink:https:\/\/twitter.com\/elonmusk\/status\/1710030124735762891?s=20\" aria-label=\"choice words\">choice words<\/a> to say about the SEC\u2019s latest move. \u201cA comprehensive overhaul of these agencies is sorely needed, along with a commission to take punitive action against those individuals who have abused their regulatory power for personal and political gain. Can\u2019t wait for this to happen,\u201d he posted on X.<\/p>\n<p>Before Musk bought Twitter, he bought up shares in the formerly public company. Elon increased his stake in the social media firm to 9.2% on March 14 2022 and disclosed the new stake in April. At the time, he said he was a passive investor and didn\u2019t intend to take over the company.<\/p>\n<p>That sounds above board, but the SEC has a rule in place that anyone with more than a 5% stake in a publicly traded company must disclose it in 10 days. The SEC then sent an inquiry to Musk because he used the wrong form to disclose the new stake.<\/p>\n<p>If you didn\u2019t already guess, Musk and the SEC have a tumultuous relationship going back years. In 2018, the billionaire was badly burned when he settled a fraud investigation over his infamous \u201cfunding secured\u201d tweets about taking Tesla private. Musk paid a $20 million fine, gave up his role as Tesla\u2019s chairman and agreed to have his posts about Tesla pre-approved by lawyers. Elon has since tried to terminate the settlement in court, but the judge denied the plea.<\/p>\n<p>The Twitter probe isn\u2019t the only ongoing investigation into a Musk-owned company. The SEC is looking into whether Tesla funds have been used on a secret internal project which is rumored to be a house for Elon. The Justice Department has also joined forces with the SEC to determine if Tesla oversold its Autopilot self-driving system to customers.<\/p>\n<p>You can see why Elon felt the need to call the agency the \u201cShortseller Enrichment Commission\u201d, but when you\u2019re the world\u2019s richest man, there\u2019s bound to be a lot of scrutiny.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Could X go public again?<\/h2>\n<p>Ever heard of a SPARC? It\u2019s SPAC 2.0, and one activist investor has one ready to go for X. Hedge fund manager Bill Ackman\u2019s company Pershing Square has secured regulatory approval for the new investment vehicle, aiming to merge with a private company and raise at least $1.5 billion.<\/p>\n<p>The SPARC would find a target company first, whereas a SPAC raises money from investors first before approaching a business. Ackman says he hasn\u2019t approached X yet about the deal, though Elon has previously commented that he intends to take X public again.<\/p>\n<p>Ackman also seems to think X might be interested in the deal. He told CNBC that the social media company\u2019s eye-watering $13 billion debt load might be a good enough reason to consider the investment offer. There\u2019s also the not-so-small matter of X\u2019s value, which has significantly declined since Elon took over the company a year ago for $44 billion and is now valued at around just $8 billion due to a 60% drop in advertising.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Is a SPARC risky for X?<\/h2>\n<p>It\u2019s worth noting that SPAC merger numbers have dropped off a cliff since high-profile examples of the investment vehicle have proven to be unprofitable at best and disastrous for investors at worst. EV maker Lucid Group is one of the biggest failures, generating $4.5 billion in capital and a $24 billion valuation through a SPAC and then seeing its share value drop over 77% since.<\/p>\n<p>According to University of Florida finance professor Jay Ritter, the 101 SPAC IPOs from last year saw their share prices decline by an average of 59% in the 12 months following the debut. That might be why there have only been 22 so far in 2023.<\/p>\n<p>Okay, we\u2019re talking about a new SPARC, not a SPAC. Ackman is keen to point out that this shiny new merger idea protects investors rather than favoring insiders and sponsors of a deal. The main difference is that a SPARC has ten years to complete a deal compared to a SPAC\u2019s two years, and the sponsors can only sell their shares after prices are 20% higher three years after the merger.<\/p>\n<p>Semantics aside, the SPARC is an untested investment idea that X would be the guinea pig. Investors might not be keen to risk money, having already been burned by SPACs.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">The bottom line<\/h2>\n<p>The SEC suing someone to testify is an unusual move. With such an acrimonious relationship between the regulators and Musk, it\u2019s hard to tell whether it\u2019s justified.<\/p>\n<p>As for the potential SPARC merger and taking X public again, it\u2019s all rumors at this point but could be a lifeline for the social media platform as it struggles with its financial position. Watch this space on both counts.<\/p>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/qai\/2023\/10\/09\/sec-sues-elon-musk-to-enforce-testimony-for-twitter-probe\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key takeaways The SEC is suing Elon Musk to testify in its ongoing Twitter probe after he missed a scheduled date Lawyers for Musk said the investigation is \u201cmisguided\u201d The news comes as a new investment vehicle from activist investor Bill Ackman could take X public again Can Elon Musk catch a break right now? [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":70525,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-70524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEC Sues Elon Musk To Enforce Testimony For Twitter Probe | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Key takeaways The SEC is suing Elon Musk to testify in its ongoing Twitter probe after he missed a scheduled date Lawyers for Musk said the investigation\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=70524\" \/>\n<meta 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