Analysis-Why Elon Musk might lose his latest battle with the SEC over Twitter probe
By Chris Prentice
WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission (SEC) has taken Elon Musk to court again, and this time it may win.
The agency on Thursday asked a federal court to force Musk to testify for its investigation into his $44 billion takeover of social media giant Twitter, the third time the SEC has taken Musk to court.
It sued him in 2018 and again in 2019 in relation to a tweet Musk sent saying that he had funding secured to take his electric carmaker Tesla (NASDAQ:TSLA) private. The 2018 lawsuit was quickly settled on the condition that lawyers vet Musk's future tweets. The 2019 lawsuit by the SEC trying to enforce that deal did not go their way.
In this case, the SEC is on solid ground as the law enforcing the requirements of investigative demands, or subpoenas, is clear cut, said several former SEC officials.
While the stakes are lower this time, the new case again shines a spotlight on the extraordinary feud between the world's richest man and most powerful securities regulator, which has for years struggled to bring Musk to heel.
«This case is different from past forays between the SEC and Elon Musk because it's a subpoena enforcement case. These cases are really cut and dry,» said Stephen Crimmins, a partner with Davis Wright Tremaine law firm and a former SEC trial lawyer.
«The law provides the SEC has subpoena power to take investigative testimony and gather documents.»
If Musk defies the court, he is likely to be fined until he testifies, lawyers said. Further defiance could, in an extreme scenario, lead to jail.
The SEC, which declined to comment, is probing whether Musk broke securities laws in 2022 when he bought stock in Twitter, which Musk renamed X, as well as statements
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