US judge rejects SEC bid to sanction Elon Musk

Background

The SEC had sought a declaration that Musk violated a May 31 court order to provide testimony. They argued that having only to repay travel costs would not deter many other people from ignoring court orders, especially someone with Musk’s extraordinary means.

Decision

US District Judge Jacqueline Scott Corley in San Francisco ruled that sanctions over Musk’s Sept. 10 absence were unnecessary. This decision was made after Musk testified on Oct. 3 and agreed to pay the SEC’s $2,923 of travel costs.

Rationale

Judge Corley wrote that “because the present circumstances forestall any occasion for meaningful relief that the court could grant, the SEC’s request is moot.” This means that the SEC’s request was deemed unnecessary due to the circumstances surrounding Musk’s testimony and payment of travel costs.

Context

The SEC is investigating whether Musk violated securities laws in early 2022 by waiting at least 10 days too long to disclose he had begun accumulating Twitter stock. Critics and some investors have said this let him buy shares cheaply before he eventually disclosed a 9.2% Twitter stake, and shortly thereafter offered to buy the whole company.

Reactions

The SEC did not immediately respond to a request for comment after business hours. Lawyers for Musk also did not immediately respond to similar requests.

Key Points

• The SEC sought a declaration that Musk violated a May 31 court order to provide testimony.

• Musk claimed he complied with the order by testifying on October 3.

• The judge ruled that the circumstances did not warrant any meaningful relief, making the SEC’s request moot.

• The SEC is investigating whether Musk violated securities laws in early 2022 by waiting at least 10 days too long to disclose his accumulation of Twitter stock.