A national tribunal successful California ruled connected Saturday that Elon Musk must attest earlier nan Securities and Exchange Commission regarding his acquisition of Twitter, which he has since renamed X.
The U.S. District Court for nan Northern District of California decided to enforce a lawsuit for Musk's grounds regarding imaginable violations of national securities laws.
The 2 parties initially agreed to a day and clip for Musk to attest astatine nan SEC’s San Francisco agency astir imaginable violations of national securities laws successful relationship pinch his 2022 acquisition of Twitter and his statements astir that purchase, according to nan filing. However, Musk later "did not look and resists nan lawsuit connected nan grounds that nan SEC’s investigation is baseless and harassing and seeks irrelevant information."
Musk besides contends that nan subpoena, issued by an SEC unit personnel appointed by nan SEC’s Director of Enforcement, exceeds nan "SEC’s authority because it was not issued by an serviceman appointed by nan President, a court, aliases nan caput of a department, arsenic required by nan Appointments Clause of nan U.S. Constitution," nan ruling notes. But arsenic nan SEC counters, nan unit attorneys who motion subpoenas are non-officer labor not taxable to nan Appointments Clause: they deficiency nan "extensive powers… comparable to a national territory judge conducting a chair trial."
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In a determination Saturday, U.S. District Judge Laurel Beeler, wrote, therefore, "The tribunal enforces nan subpoena: nan grounds is applicable and worldly to nan SEC’s investigation, and nan grounds is not unduly burdensome. As to nan statement that nan lawsuit exceeds nan SEC’s authority, nan Exchange Act authorizes nan subpoena, and nan unit attorneys who rumor subpoenas are not inferior officers taxable to nan Appointments Clause."
The 2 parties must meet wrong a week to schedule that testimony. If they can't agree, past they whitethorn taxable a associated missive little pinch their respective positions, Beeler wrote.
In December, Beeler rejected arguments from Musk’s lawyer that nan SEC lacked authority to rumor subpoenas, holding that nan financial regulator has wide investigative authority and adding that nary judge would "second-guess" an SEC investigation. Beeler instructed Musk’s representatives and nan SEC to put for Musk to beryllium for 1 much four-hour deposition pinch nan agency’s investigators, aliases she would rumor an bid compelling his grounds early this year.
The SEC sued Musk successful October to unit nan world’s richest man, who besides serves arsenic CEO of Tesla and SpaceX, to attest successful an investigation into nan $44 cardinal deal done which his ownership group took Twitter backstage and later rebranded it arsenic X. That suit followed Musk’s refusal to be a September question and reply during nan SEC’s investigation.
ELON MUSK MUST TESTIFY IN SEC PROBE OF TWITTER TAKEOVER, ACCORDING TO TENTATIVE RULING
Regulators are looking into whether Musk complied pinch nan rule erstwhile he revenge paperwork pinch nan SEC disclosing his purchases of Twitter’s banal and whether his statements astir nan acquisition were misleading.
The SEC began investigating Musk’s financial liking successful nan societal media institution successful April 2022, erstwhile he first disclosed nan acquisition of a important information of Twitter’s banal and began mulling a takeover bid. The woody yet closed successful October 2022 aft Musk considered backtracking connected his connection and faced a lawsuit.
Musk provided nan SEC pinch documents for nan investigation and testified via video convention for 2 half-day sessions that July. The SEC indicated its attorneys person much questions for Musk pursuing nan receipt of caller documents, which resulted successful nan unsuccessful effort to question and reply him successful September 2023. The billionaire refused to comply, prompting nan regulator’s suit nan pursuing month.
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Attorneys for Musk based on past period successful consequence to nan October suit that nan "SEC’s pursuit of Mr. Musk has crossed nan statement into harassment."
They besides precocious a law statement that nan SEC’s enforcement unit wasn't lawfully appointed and truthful lacked authority to rumor subpoenas.
Reuters contributed to this report.