Judge rejects SEC’s bid to impose sanctions on Elon Musk over missed testimony in Twitter investigation

A federal judge in San Francisco has rejected a U.S. Securities and Exchange Commission (SEC) request to sanction Elon Musk after the billionaire failed to appear for a court-ordered deposition in September as part of an investigation into his $44 billion acquisition of Twitter. Rebranded as X.

U.S. District Judge Jacqueline Scott Corley ruled Friday that imposing sanctions against Musk was unnecessary because Musk complied with the order by testifying on Oct. 3 and agreed to pay the SEC’s $2,923 in travel expenses.

“The SEC’s request is moot because current circumstances preclude any opportunity for meaningful relief that a court could grant,” Judge Corley wrote in his decision.

The SEC had requested a declaration that Musk violated the court order issued on May 31 by not attending his testimony scheduled for September 10. The regulator argued that merely refunding travel expenses was insufficient and would not deter others from ignoring court orders, especially given Musk’s enormous wealth. Musk, whose net worth is $321.7 billion according to Forbes, testified in early October and said that he complied with the order.

The SEC is investigating whether Musk violated securities laws by delaying the announcement of his growing Twitter stake by at least 10 days, allowing him to buy shares at lower prices before announcing a 9.2% stake and then making a buyout offer in early 2022. Critics, including some investors, claim Musk’s delayed announcement gives him an unfair financial advantage.

In July, Musk stated that he misunderstood the SEC’s disclosure rules and called the delay an “inadvertent mistake.”

This isn’t Musk’s first legal battle with the SEC. In 2018, the regulator sued him over a tweet in which he claimed he had secured financing to buy Tesla at $420 per share. Musk settled the case by paying a $20 million fine, resigning as chairman of Tesla, and agreeing to have certain tweets reviewed by Tesla lawyers before being published.

Musk was last in Florida on September 10, managing SpaceX’s Polaris Dawn mission at Cape Canaveral; which coincided with the date of the original statement.

While the SEC’s sanction request was rejected, its investigation into Musk’s share purchase from Twitter continues. The case, titled SEC v Musk, is being heard in the U.S. District Court for the Northern District of California.