back to article Elon Musk can't wriggle out of SEC Twitter fraud inquiry

A federal judge has ruled in favor of the Securities and Exchange Commission (SEC), ordering tech mogul Elon Musk to return for additional testimony in their investigation of his 2022 Twitter acquisition. Musk, who previously testified twice in the matter, had refused to answer further questions, calling the SEC's requests …

  1. Vincent van Gopher
    Mushroom

    Space Karen says 'leave me alone, I'm the Galactic Overlord of the Internet. You're nobody . . . GFY'

    1. Hubert Cumberdale Silver badge

      He really needs to FOD.

  2. Steve Davies 3 Silver badge
    Joke

    Quick Elon

    Run for Congress then you can ignore subpoena's at will. (See Gym Jordan et al)

    1. Anonymous Coward
      Anonymous Coward

      Re: Quick Elon

      > Run for Congress then you can ignore subpoena's at will ..

      Or engage in insider trading.

      1. DS999 Silver badge

        Re: Quick Elon

        Sure but don't think it is limited to Pelosi, cashing in via insider trading is one of the few truly bipartisan things left in congress!

  3. Robert Grant

    Can we just pause car electrification, non-Soyuz rockets, internet anywhere, and missions to Mars and focus on the investors who saw a tweet and wanted a quick buck?

    1. gecho

      Bravo! Many people use the false dilemma fallacy that we can only do 1 thing at a time, however you believe we can do 4 things, it's just the 5th one that is a problem.

      1. Doctor Syntax Silver badge

        it's just the 5th embarrassing one that is a problem.

      2. Robert Grant

        > however you believe we can do 4 things, it's just the 5th one that is a problem

        It might be a problem - anything can be a problem to someone - but it seems not on the same scale of things as the others. I don't think 5 is a problem if anyone does it. I think it's particularly distracting when large, unnatural steps forward can be made in multiple areas.

    2. Flocke Kroes Silver badge

      Car electrification will continue fine without Musk. Musk used to do a good job hyping Tesla's share price allowing access to capital at low interest rates. Musk blew his credit rating on Twitter loans and is now just a legal liability. It least he could not loot $55B from Tesla.

      I do thank Musk for funding SpaceX through three Falcon 1 explosions. SpaceX did Crew Dragon despite Musk's help. Short sighted investors would stay with Starship to LEO because it massively reduces the cost of operating Starlink. Starship HLS would also continue because it can deliver profit on its Artemis contract plus potential tourist rides. That gets propellant transfer and storage done. I am not sure if short sighted investors would spring money for Mars but the big ticket items would be in place anyway.

      1. Alan Brown Silver badge

        "I am not sure if short sighted investors would spring money for Mars but the big ticket items would be in place anyway."

        One of the advantages of Starship is that it has acievable long-term goals whilst catering to short-termist investment

        Once Starlink starts providing direct linking between bourses(*) it should become self-funding even without the "internet everywhere" stuff

        (*) NY-London/Paris is obvious, but linking US/EU to Asian stock exchanges unlocks possibilities that haven't previously existed - this is the primary financial justification for the polar orbiting birds (it's a shorter path than other options) as there really isn't the income from high-latitude installations to make it worthwhile (I could see governments shelling out for antarctic bases but even that's dubious economically for the constellation. OTOH adding land observation cameras to the polar constellations might bring some valuable extra income)

  4. Jim Mitchell

    The rich can afford to spend the money to contest and delay every step of the process.

    1. Doctor Syntax Silver badge

      Until the arrest for contempt of court.

      1. Anonymous Coward
        Anonymous Coward

        He's not the only one should get that reward - there are plenty in Washington who ought to languish in jail too.

        1. Pascal Monett Silver badge

          If only !

    2. Steve Davies 3 Silver badge
      Big Brother

      Delay, Delay and Deny

      "I did nothing wrong"

      All part of the standard playbook of 'The Orange Genius" and Musk's overlord, Donald J Trump.

      Delaying a court case for years is his SOP. I find that strange because if he truly did nothing wrong, wouldn't it be in his best interests (especially $$$$ wise) to get the trial over with sooner rather than later?

      No? I guess that he's just like almost every other politician... as soon as they open their mouth, they lie.

      1. A Non e-mouse Silver badge

        Re: Delay, Delay and Deny

        Delaying a court case for years is his SOP

        To be fair, it's the SOP for anyone rich. They aim to bleed you dry with lots of frivilious legal schenanigans.

        1. Doctor Syntax Silver badge

          Re: Delay, Delay and Deny

          Pissing off a judge whilst doing so is not a good tactic. He's failed to obey a subpoena. The word translates to "under pain", i.e. fail and you get punished. If you read the judgement linked in the article she fids for the SEC but in the final paragraph she's pretty terse - in the vernacular it translates to "Get your shit together PDQ or else I'll get it together for you."

      2. aerogems Silver badge

        Re: Delay, Delay and Deny

        Technically this is what he learned from his late mobster lawyer Roy Cohn. While things are tied up in court, he's not only free, as in not in prison, but free to keep on committing the same crimes he's been committing that got him in legal trouble in the first place.

        1. Robert 22

          Re: Delay, Delay and Deny

          and use one's legal problems as evidence to argue that he is being persecuted by out of control prosecutors and judges.

      3. Robert 22

        Re: Delay, Delay and Deny

        It is interesting how Trump leaves no stone unturned to create every delay that can be created, then complains about the delays and their costs.

  5. Gene Cash Silver badge

    Huh?

    > Initially claiming to be a passive investor, Musk later joined the company's board and eventually purchased it for $44 billion in October 2022.

    Um, wasn't he forced to buy it after a tweet? I thought that was the reason behind his temper tantrums and running twitter into the ground.

    1. Helcat

      Re: Huh?

      I'm also a little confused by the 'joined the company board': I thought he'd declined when he was told he'd have to toe the line on the board rules, and that was what prompted him to say he'd buy the company.

    2. Anonymous Coward
      Anonymous Coward

      Re: Huh?

      Yup. It's amazing that an idiot can blow $44B just so he doesn't have to say he was mistaken.

      1. chivo243 Silver badge
        Coat

        Re: Huh?

        I don't think it was blow, but weed that got him in trouble... I did what while high??

      2. Flocke Kroes Silver badge

        Re: Reasons for wasting $44B

        1) Musk's childhood dream is to run the biggest internet bank / payment site / online stock broker / pump & dump hype distribution centre. He rushed in to signing a seller friendly $44B purchase agreement for a large captive user base. Reality partially intruded: the regulations to prevent bankers committing securities fraud are way harsher than those for CEOs of publicly traded companies.

        2) The thumbscrew that got Musk to stop whining and pay up was that the delays opened him up to being deposed. $44B was less than the cost of being caught lying under oath or telling the truth.

    3. Not Yb Bronze badge

      Re: Huh?

      No, he chose to sign a merger agreement that had some (rather standard) clauses that made it almost impossible to back out of the deal. Nothing to do with what he tweeted. It's not like Twitter has a direct control of his brain or anything... Oh...

      1. Excused Boots Bronze badge

        Re: Huh?

        I believe he 'could' back out of the deal but it would have cost him around a $1 billion as damages/compensation. This is a case of his mouth running away and making promises that he thought he would never have to honour (honor?) because 'well I'm Elon and, well, 'free speech' and 'I can say anything and promise anything, but not mean it, because, well 'free speech'. Alas the law seemed to think otherwise!

        But rather than realise, 'oops', stand down, back off and pay whatever his mouth had cost him, he simply doubled down and has now blown, what 30, 40 billion, dragged Tesla and SpaceX into the whole sorry mess. Like it or not Musk is inevitable associated with both those companies, if Twitter/X/(whatever it's called today), gets bad publicity, that absolutely will impact how Tesla and SpaceX are seen by the investors.

        Tesla, honestly, has had its day now. Yes it has been massively influential in getting the world signed up to the idea of electric vehicles - but now other companies are snapping at its heels. The progress will carry on if Tesla goes out of business tomorrow.

        SpaceX is different, it is strategically important now to very many entities and governments around the world, not just the US, it can't be allowed to fail. I suspect that eventually EM will be forced out.

        1. A Non e-mouse Silver badge

          Re: Huh?

          Other commentards have noted that at SpaceX & Tesla the boards work hard to keep Karen away from tthe real action. There's no-one to do that at Twitter.

        2. DS999 Silver badge

          Re: Huh?

          No, the $1 billion termination fee only applied in very specific circumstances. Basically that he could not obtain financing (which given his net worth was never going to fly) or regulators blocked it. It was not a way for him to say "I changed my mind".

          All he would have needed was a due diligence clause that let him obtain information from Twitter BEFORE the deal was finalized, then if he really did believe there were more robots operating on it than he thought he might have been able to use that as a way out. He tried claiming that, but it didn't get him anywhere because he was dumb enough to make an offer without any due diligence AT ALL. Hard to imagine for a $44 billion purchase, when most of us wouldn't buy a $44,000 used car without some assurances in place (some type of warranty, or perhaps a return period of a week or so, or at the very least the right to take it to a mechanic of our choice to have it looked at before buying)

        3. MrRtd

          Re: Huh?

          Nope. You believe incorrectly. There was never a get out of the sale for a billion clause. It would have been lunacy for Twitter to include such a clause if it meant they would lose out on the other 40-something billion.

    4. DS999 Silver badge

      Re: Huh?

      Um, wasn't he forced to buy it after a tweet?

      No, he was forced to buy it because he had tendered Twitter an offer through the usual channels (i.e. not on Twitter but prepared by lawyers, on paper, etc) without the usual contingencies.

      He tried to weasel out of it not because he didn't want to buy Twitter, but because he later decided he wanted to pay less than his original offer. He was forced to buy it at the original price because he had made a legal offer and it was accepted, and he had been so dumb (or stoned) that he didn't bother to place any due diligence language in the offer that might have allowed him to claim stuff like "there are more robots on Twitter than I thought" as a way to use the threat of terminating the deal as a way to renegotiate for a lower price.

  6. Anonymous Coward
    Anonymous Coward

    SEC politically motivated “investigation”

    a. Musk announces he's going to buy Twitter.

    Gets sanctioned by the SEC.

    b. Musk buys Twitter.

    Gets sanctioned by the SEC.

    1. Not Yb Bronze badge

      Re: SEC politically motivated “investigation”

      Neither of those things have happened. He was sanctioned for tweeting that he was taking Tesla public, among other things. The "buy Twitter" tweet happened some time after the consent decree was in place.

      An investigation isn't a sanction.

      1. Pascal Monett Silver badge

        Re: An investigation isn't a sanction

        Agreed.

        But being an asshole publicly should definitely be sanctioned.

    2. DS999 Silver badge

      Re: SEC politically motivated “investigation”

      As mentioned, he was sanctioned for his "taking Tesla public at $420/share" tweet, which had an immediate and obvious impact on the share price that it was trading well below at the time.

      He's being investigated around Twitter because it appears he did not follow SEC rules, which require disclosing when you have accumulated a certain percentage of stock in a publicly traded company, and to truthfully state your intentions when you do (in other words, if you plan to get a seat on the board to exercise control, to attempt to take it over, or just want to own a chunk as a passive investment because you think it is a good company) There are very good reasons the SEC has these rules, and they have been in place and been regularly enforced since long before Musk arrived on the scene.

    3. Doctor Syntax Silver badge

      Re: SEC politically motivated “investigation”

      AIUI the issue of this investigation is that he bought shares and then announced his intention to buy the company. That meant that as the share price then rose it made the shares he'd previously bought more valuable or, to look at it another way, he'd bought them for less - and the sellers got less for them - than if he'd announced that was what he was going to do.

      And he hasn't been sanctioned yet if at all. At this stage he's just being investigated.

  7. martinusher Silver badge

    The Problem with being a Public Company

    Musk discovered the hard way that being a public company completely changes how you have to run a business. Suddenly its not about cars and stuff, its all about share prices and financial flows. His foray into business culture has resulted in some very hard lessons which is (I'd guess) why companies like SpaceX are still private and are likely to remain that way. Its also why there's an overall trend for many larger -- and successful -- companies to go or remain private. There is ample private capital around, you don't need to play with the market unless you're just trying to float something to make a quick killing.

    (From a purely personal 'little person' perspective working at a closely held company is vastly superior to a public one because you don't get the 'breathing' of personnel due to the variations in share price.)

    I don't see what the SEC's interest in Musk is. Twitter was overvalued when he was literally forced to buy it -- he and his fellow private investors, that is. They've had to take a serious loss on the company's market cap. Nobody's manipulating the market. The only thing special about this is the word 'Musk'.

    1. Orv Silver badge

      Re: The Problem with being a Public Company

      "Literally forced to" is a funny way to write "signed an agreement to do, then tried to weasel out of what he'd signed."

    2. Flocke Kroes Silver badge

      Re: SEC interest in Musk

      The SEC are investigating Musk's lack of required actions leading up to the purchase agreement. He bought Twitter shares as a passive investor, which is legal up to a point. At some point his shares commanded significant voting control. At that point he was required to file a notice with the SEC who would publicly announce that his share holding had gone beyond the passive investor level. The market would have responded - probably by holding out for a higher price because of the expectation that Musk would continue to buy more Twitter.

      We know Musk bought his early Twitter shares through multiple holding companies to prevent news getting out before he was ready. Again, not a problem for a passive investor but naughty when he persisted beyond that level without an SEC filing. The normal way forward is to file late with an apology and the world moves on.

      Musk is screaming like a stuck pig. His lawyers are presenting flimsy excuses in a desperate attempt to delay. Last time we heard shit like this Musk paid $44B for Twitter to avoid being deposed. I think that shows there is something really bad Musk does not want to answer questions about.

  8. Mitoo Bobsworth

    The Farce is strong in this one...

    "Musk's defense in this case is that the SEC is acting unconstitutionally and violates his free speech"

    No-one is removing his right to free speech. Musk can bullshit all he wants - it's being held accountable for his bullshit that he's whining about. Karens generally don't like that - they prefer self-conferred impunity.

    1. Doctor Syntax Silver badge

      Re: The Farce is strong in this one...

      He's actually being investigated for not speaking, not announcing he was going to buy Twitter whilst actually starting to accumulate shares.

    2. aerogems Silver badge

      Re: The Farce is strong in this one...

      Not only that, he's free to step down as CEO of Tesla any time and then be done with having to have lawyers vet his comments. The only thing standing in the way of his freeze peach and freedumb is his ego. Every single other high ranking executive at every other publicly traded company listed on a US stock exchange has to abide by the same restrictions on what they can say about the company.

      Plus, in this case, he's being held accountable for making a false statement that had a significant impact on Tesla share prices. That's called market manipulation. He was barely even given a slap on the wrist for that with a small fine, having to relinquish the chairmanship of the Tesla board, and having his lawyers babysit his Twitter addiction. People have spent several years in prison for far less than that. Just ask Jared Kushner's dad. Then, he knew the rules about disclosing his stake in Twitter, but chose to ignore it, again manipulating the market. By rights his ass should be rotting in a prison cell right now. If any of us had done that sort of thing, we likely would have already been tried, convicted, and well into our sentence by now. Xitler can whine all he wants about how bad he has it, and how everyone's out to get him, but he lives a charmed life compared to most of the rest of the population.

  9. Anonymous Coward
    Anonymous Coward

    Twitter (now known as X)

    Can we at least agree that the “X” should now be changed to a lower case “x”?

    He is rapidly shrinking the outfit.

    1. aerogems Silver badge
      Coat

      Re: Twitter (now known as X)

      You might say he's flushed it down the Xitter.

  10. AbeSapian

    I Feel For You ...

    When a poor guy is investigated, he's stripped naked and his body cavities are probed.

    When a rich guy is scrutinized, it's harassment.

    I've suffered a critical failure in my empathizer compensator.

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