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Elon Musk in trouble with the SEC · Elon Musk Podcast

• 0:00
  So what exactly is happening with Elon Musk and the $44
• 0:04
  billion takeover of Twitter? And why did Musk skip a court
• 0:08
  ordered testimony about it? What's the SE CS role in the
• 0:12
  investigation and why is the agency seeking sanctions against
• 0:16
  Elon Musk? These are some of the key
• 0:19
  questions we'll explore as we break down the latest
• 0:21
  developments in the ongoing legal saga between Elon Musk and
• 0:25
  the Securities and Exchange Commission of the SEC,
• 0:29
  specifically concerning Musk's handling of his Twitter stock
• 0:34
  purchases of the SE CS investigation revolves around
• 0:38
  whether Musk properly disclosed his purchases of Twitter stock
• 0:42
  before buying the platform. His PRO was also scrutinizing
• 0:46
  whether his statements around the acquisition were misleading.
• 0:50
  Now, Musk's $44 billion deal to take Twitter private, now
• 0:54
  rebranded as Ex, of course, has come under intense scrutiny,
• 0:57
  with the SEC examining his actions closely to determine if
• 1:02
  he violated any securities laws during the process.
• 1:05
  Now, Musk's failure to appear for a court ordered testimony in
• 1:10
  September has now triggered the possibility of sanctions against
• 1:15
  him. Now, earlier this year, a
• 1:17
  federal judge mandated that Musk's participation in the SE
• 1:21
  CS ongoing investigation. Specifically, the SEC wanted to
• 1:26
  take Musk's testimony regarding the sequence of his Twitter
• 1:30
  stock acquisitions and whether his public communications were
• 1:34
  accurate and lawful. The central issue is whether
• 1:38
  Musk was transparent about his stock options and the timeline
• 1:42
  of his disclosures. Public company investors like
• 1:46
  Musk are required to disclose stock purchases after crossing a
• 1:50
  5% threshold ownership. But the SEC suspects that Musk
• 1:56
  delayed his disclosure by at least 10 days.
• 2:00
  Now, the September testimony was crucial, and both parties had
• 2:05
  agreed on a date, September 10th of 2023.
• 2:08
  SEC lawyers made the trip to Los Angeles, expecting to hear from
• 2:11
  Musk on that day. However, mere hours before the
• 2:14
  testimony was set to begin, Musk's lawyer informed the SEC
• 2:18
  that Musk had to urgently travel to the East Coast for the launch
• 2:23
  of Spacex's Polaris Dawn mission.
• 2:26
  This sudden change caught the SEC off guard, given the agency
• 2:30
  had already spent significant resources flying 3 attorneys to
• 2:33
  Los Angeles for this meeting of. The SEC pointed out in a court
• 2:38
  filing that Musk's escalation for missing the testimony was
• 2:42
  inaccurate, accusing him of engaging in gamesmanship.
• 2:46
  And the SEC noted that SpaceX had announced the launch date of
• 2:50
  the Polaris Dawn mission two days prior, which meant that
• 2:55
  Musk, as Spacex's chief technical officer, should have
• 2:59
  already known about the scheduling conflict before
• 3:02
  informing the SEC last minute. Now, the regulator found the
• 3:06
  timing of Musk's travel notification highly suspect.
• 3:10
  According to the SE CS court filing, the agency felt that
• 3:13
  Musk's abrupt withdrawal from the scheduled testimony wasn't
• 3:17
  simply an unavoidable emergency. The SEC said that Musk should
• 3:23
  have notified them sooner rather than just three hours before the
• 3:27
  testimony, particularly because the SpaceX launch date had
• 3:31
  already been publicized. Now, the agency has expressed
• 3:34
  frustrations with Musk's actions, accusing him of
• 3:37
  deliberately delaying the investigation, which the SEC
• 3:41
  views as an attempt to obstruct the legal process now.
• 3:46
  As a result, the SEC is now pushing for meaningful
• 3:49
  conditional relief if Musk fails to appear for a newly agreed
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  upon testimony date in early of October.
• 3:56
  The regulator has also signaled its intention to file a
• 3:59
  sanctions motion against Musk, and the SA CS filing states that
• 4:03
  it incurred thousands of dollars in travel costs when it's legal
• 4:07
  team flew to Los Angeles for the canceled testimony.
• 4:11
  Now, the sanctions motion would seek to recover these costs and
• 4:15
  potentially impose additional consequences on Musk for failing
• 4:19
  to comply with the court order testimony.
• 4:21
  Now, in response to the SC CS filing, Musk's lawyers argued
• 4:26
  that the court's intervention was unnecessary since both
• 4:29
  parties had already agreed on a new date for the testimony.
• 4:33
  Now, according to Musk's legal team, the rescheduled date in
• 4:36
  October should resolve this matter and the SC CS pursuit of
• 4:40
  sanctions is excessive. Musk's attorney, Alex Spiro
• 4:44
  called the sanctions drastic and claimed the SE CS position
• 4:49
  discarded the fact that Musk's absence was due to an emergency
• 4:54
  the SpaceX mission launch, which according to Spiro could not be
• 4:58
  avoided without endangering astronauts lives.
• 5:02
  Now. Spiro also argued that Musk had
• 5:05
  complied with court orders in the past and that his failure to
• 5:08
  testify in November, sorry September 10th, was not a
• 5:12
  deliberate attempt to undermine the investigation.
• 5:15
  In the court filing, Spiro stated that there was no reason
• 5:18
  to believe such an emergency would reoccur and thus there was
• 5:22
  no need for further action from the court now.
• 5:25
  Musk's legal team maintained that his absence on the original
• 5:29
  testimony date was unintentional and it was caused by
• 5:32
  circumstances beyond his control.
• 5:35
  Yes, he sees investigation into Musk's conduct during the
• 5:38
  Twitter acquisition as part of a broader legal struggle between
• 5:41
  the billionaire and the Regulatory agency.
• 5:43
  The tensions between Musk and the SEC date back to at least
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  2018, when the agency sued Musk over his infamous tweet where he
• 5:53
  claimed he had funding secured to take Tesla private.
• 5:58
  That tweet led to allegations of market manipulation, resulting
• 6:02
  in Musk paying a $20 million fine and stepping down as
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  Tesla's chairman. The SE CS current investigation
• 6:10
  is not Musk's first encounter with the regulator.
• 6:14
  Aside from the 2018 lawsuit, the SEC has also scrutinized Musk's
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  statements regarding Tesla's Full Self Driving technology and
• 6:23
  the use of the company's resources to build a reported
• 6:26
  glass house for Musk. Now, these past incidents have
• 6:30
  fueled an already adversarial relationship between Musk and
• 6:33
  the SEC, with Musk frequently accusing the agency of overreach
• 6:38
  and harassment. Now, Musk's legal battles with
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  the SEC are notable not just for their scope, but for the
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  billionaire's often combative approach.
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  Musk has been outspoken in his criticism of the SEC, of course,
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  accusing the agency of unfairly targeting him and his companies.
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  And in the past, Musk has described the SE CS enforcement
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  actions as unjustified and has repeatedly pushed back against
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  what he sees as excessive regulatory scrutiny.
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  Now, this ongoing Twitter stock investigation is just the latest
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  chapter in a long history of disputes between Musk and the
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  SEC. Central to the SE CS current
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  probe is the question of whether Musk violated security laws when
• 7:24
  he began acquiring Twitter stock in early 2022.
• 7:29
  Now, according to U.S. Securities regulations,
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  investors who by 5% or more of a public company are required to
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  disclose their holdings within 10 days.
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  Musk eventually disclosed that he had accumulated a 9.2% stake
• 7:44
  in Twitter, but did so after the required time frame.
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  The delay in disclosure has raised concerns that Musk's
• 7:50
  actions may have been intended to manipulate the market, and in
• 7:54
  July of 2023, Musk publicly stated that he misunderstood the
• 7:58
  SE CS disclosure requirements, that the delay in reporting his
• 8:02
  Twitter stock purchases was a mistake.
• 8:04
  However, critics, including Twitter shareholders, have
• 8:07
  questioned whether this explanation is credible.
• 8:11
  Some have suggested that Musk's delay in disclosing his stake
• 8:15
  allowed him to buy more shares at a lower price before the
• 8:19
  market reacted to the news of his large investment, raising
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  concerns about potential market manipulation.
• 8:27
  Now, Musk's acquisition of Twitter itself was marked by
• 8:30
  significant controversy. After initially offering to buy
• 8:33
  the company in April of 2022, Musk attempted to back out of
• 8:37
  deal, citing concerns over the number of fake accounts on the
• 8:41
  platform. This led to a protracted legal
• 8:45
  battle with Twitter's board, which culminated in Musk
• 8:48
  agreeing to move forward with the acquisition in October of
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  2022. Now, the $44 billion deal was
• 8:55
  finalized later that month, with Musk officially taking control
• 8:59
  of the platform and promptly renaming it X.
• 9:03
  And since acquiring Twitter, Musk has made a series of
• 9:07
  sweeping changes to the platform, from altering its
• 9:10
  content moderation policies to laying off large portions of the
• 9:14
  workforce. Changes have drawn both praise
• 9:17
  and criticism, with some applauding Musk's vision for the
• 9:21
  platform and others raising concerns about the direction the
• 9:24
  company is heading under his leadership now.
• 9:27
  Meanwhile, the legal fallout from the acquisition continues,
• 9:30
  with the SE CS investigation focusing on Musk's conduct
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  leading up to the takeover.