New York
CNN
—
Elon Musk apparently has one last battle to wage with outgoing Securities and Exchange Commission Chairman Gary Gensler.
Musk disclosed on his social media platform X that the agency is demanding he agree to a fine of an undisclosed amount to settle charges over his initial purchases in 2022 of shares of what was then called Twitter.
Musk posted a letter sent from his attorney Alex Spiro to Gensler in which he said that the agency demanded that Musk agree within 48 hours to pay a fine related to his failure to disclose his initial purchases of shares of Twitter “or face charges on numerous counts.”
“Oh Gary, how could you do this to me?” he mockingly said in the post.
The SEC said it is agency policy not to comment on ongoing investigations.
The letter claimed that SEC staff had indicated “this demand was the result of a directive from their superiors and that the charges would be brought imminently unless Mr. Musk acquiesced.” The letter says Musk refuses to agree to the demand.
Musk and the SEC have been been clashing for a number of years, including during Trump’s first term. But the clashes have elevated in recent years, as Musk has challenged the agency’s rights to limit his communications with investors, and Gensler has become a one of the most vocal critics of crypto currencies, in which Musk is a major investor and advocate.
The letter Musk posted also said that Spiro had been subpoenaed to to give testimony, which he refused to do so. It also said that the agency had also reopened an investigation into another one of Musk’s companies, Neuralink.
“This series of events makes clear that the commission is not motivated to seek the truth but instead is engaged in an improperly motivated campaign against Mr. Musk and the individuals and companies associated with him,” Spiro wrote in the letter. “We demand to know who directed these actions – whether it was you or the White House. This tactics and misguided schemes will not intimidate us.”
In 2018 the SEC reached a settlement with Musk and Tesla after finding that Musk had deceived investors when he tweeted out that he had “funding secured” to take Tesla private. Under that settlement Tesla and Musk both paid fines of $20 million, and Musk agreed to have his tweets about material events at the company approved by others at Tesla. He also gave up the title of chairman of Tesla, although he retained the CEO title. Musk later said he agreed to the settlement because failure to do so would have cut off vital sources of funding from banks that a then cash-strapped Tesla needed to survive.
In April 2022, Musk disclosed he had purchased 9% of the shares of Twitter ahead of his purchase of the entire company later that year. The SEC sent him a letter wanting to know why he had not disclosed those purchases within 10 days of crossing the 5% threshold of shares owned, as required by securities law. Musk eventually bought all of Twitter shares in a $44 billion purchase, and soon thereafter renamed it X.
Musk and Gensler have also clashed over regulation of crypto currencies, of which Musk is a vocal advocate, while Gensler has described as securities that should be under the authority of the SEC. Gensler has called crypto currencies as “ripe with fraud, scams and abuses in certain applications.”
But Musk, one of the key supporters of President-elect Donald Trump, won’t have to worry about dealing with a Gensler-led SEC much longer. Trump has nominated Paul Adkins, who has been co-chairman of the crypto advocacy group Digital Chamber’s Token Alliance since 2017, to lead the agency.
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