A federal judge in San Francisco has denied the U.S. Securities and Exchange Commission’s (SEC) request to sanction Elon Musk after the billionaire failed to appear for court-ordered testimony in September as part of the agency’s investigation into his $44 billion takeover of Twitter, now rebranded as X.
U.S. District Judge Jacqueline Scott Corley ruled on Friday that imposing sanctions against Musk was unnecessary since he eventually complied with the order by testifying on October 3 and agreed to cover the SEC’s $2,923 in travel costs.
“Because the present circumstances forestall any occasion for meaningful relief that the court could grant, the SEC’s request is moot,” Judge Corley wrote in her decision.
The SEC had sought a declaration that Musk violated a May 31 court order by not appearing for his scheduled September 10 testimony. The regulator argued that simply reimbursing travel costs was insufficient, particularly given Musk’s vast wealth, and would not deter others from ignoring court orders. Musk, whose net worth stands at $321.7 billion according to Forbes, countered that he complied with the order by providing testimony in early October.
The SEC is probing whether Musk violated securities laws in early 2022 by delaying the disclosure of his growing Twitter stake by at least 10 days, allowing him to purchase shares at lower prices before announcing a 9.2% stake and subsequently making a buyout offer. Critics, including some investors, claim Musk’s delayed disclosure gave him an unfair financial advantage.
In July, Musk stated he misunderstood the SEC’s disclosure rules, calling the delay an “unintentional mistake.”
This is not Musk’s first legal tussle with the SEC. In 2018, the regulator sued him over a tweet in which he claimed he had secured funding to take Tesla private at $420 per share. Musk settled the case by paying a $20 million fine, stepping down as Tesla’s chairman, and agreeing to have certain tweets vetted by Tesla lawyers before publication.
Most recently, Musk was in Florida on September 10 overseeing SpaceX’s Polaris Dawn mission at Cape Canaveral, which coincided with his original testimony date.
While the SEC’s request for sanctions has been denied, its investigation into Musk’s handling of his Twitter stock purchase remains ongoing. The case, titled SEC v Musk, is being heard in the U.S. District Court for the Northern District of California.