A California federal judge on Thursday issued a tentative ruling that billionaire Elon Musk is expected to testify again in the Securities and Exchange Commission's (SEC) investigation into last year's $44 billion acquisition of Twitter.
U.S. Magistrate Judge Laurel Beeler rejected Musk's lawyer's arguments that the SEC did not have the authority to issue subpoenas, holding that the financial regulator has broad investigative authority and adds that no judge would “second guess” an SEC investigation.
Beeler instructed Musk's representatives and the SEC to arrange for Musk to give another four-hour deposition to the agency's investigators, or it would issue an order compelling his deposition early next year.
“If you don’t resolve this, then it will be in San Francisco in February,” Beeler said during Thursday’s hearing.
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The SEC sued Musk in October to force the world's richest man, who also serves as CEO of Tesla and SpaceX, to testify in an investigation into the US$44 billion deal through which its ownership group made Twitter private and later renamed it as X.
This lawsuit followed Musk's refusal to appear for an interview in September during the SEC investigation.
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Regulators are investigating whether Musk complied with the law when he filed documentation revealing his purchases of Twitter shares with the SEC and whether his statements about the acquisition were misleading.
The SEC began investigating Musk's financial interest in the social media company in April 2022, when he first disclosed his purchase of a substantial portion of Twitter shares and began mulling a takeover bid. The deal closed in October 2022 after Musk considered backtracking on his offer and faced a lawsuit.
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Musk provided the SEC with documents for the investigation and testified via video conference in two half-day sessions that July. O SEC appointed His lawyers have more questions for Musk after receiving new documents, resulting in an unsuccessful attempt to interview him in September 2023. The billionaire refused to comply, which led to the regulator's lawsuit the following month.
Musk's lawyers argued last month in response to the October lawsuit that “the SEC's pursuit of Mr. Musk exceeded the bounds of harassment.”
They also presented a constitutional argument that SEC enforcement personnel were not lawfully appointed and therefore did not have the authority to issue subpoenas.
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The judge said she is inclined to support the SEC's argument that it has the authority to issue subpoenas, but would look at those arguments more closely before issuing an order early next year if Musk and the SEC are unable to reach an agreement. about your testimony.
Reuters contributed to this report.