A federal judge in California on Thursday issued a tentative ruling that billionaire Elon Musk must testify again in the Securities and Exchange Commission (SEC) probe of his $44 billion acquisition of Twitter last year.
U.S. Magistrate Judge Laurel Beeler rejected arguments from Musk’s attorney that the SEC lacked authority to issue subpoenas, holding that the financial regulator has broad investigative authority and adding that no judge would “second-guess” an SEC investigation.
Beeler instructed Musk’s representatives and the SEC to arrange for Musk to sit for one more four-hour deposition with the agency’s investigators, or she would issue an order compelling his testimony early next year.
“If you don’t work it out, then it’s in San Francisco in February,” Beeler said during Thursday’s hearing.
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 $44 billion deal through which his ownership group took Twitter private and later rebranded it as X.
That lawsuit followed Musk’s refusal to attend a September interview during the SEC’s investigation.
Regulators are looking into whether Musk complied with the law when he filed paperwork with the SEC disclosing his purchases of Twitter’s stock 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 the purchase of a substantial portion of Twitter’s stock and began mulling a takeover bid. The deal eventually closed in October 2022 after Musk considered backtracking on his offer and faced a lawsuit.
Musk provided the SEC with documents for the investigation and testified via video conference for two half-day sessions that July. The SEC indicated its attorneys have more questions for Musk following the receipt of new documents, which resulted in the unsuccessful effort to interview him in September 2023. The billionaire refused to comply, prompting the regulator’s lawsuit the following month.
Attorneys for Musk argued last month in response to the October lawsuit that the “SEC’s pursuit of Mr. Musk has crossed the line into harassment.”
They also advanced a constitutional argument that the SEC’s enforcement staff wasn’t lawfully appointed and therefore lacked authority to issue subpoenas.
The magistrate judge said she is inclined to back the SEC’s argument that it has the authority to issue subpoenas but would review those arguments more closely before issuing an order early next year if Musk and the SEC fail to reach an agreement on his testimony.
Reuters contributed to this report.