Elon Musk says SEC sent ‘settlement demand’ after Twitter deal probe

The Securities and Exchange Commission has issued a “settlement demand” to Elon Musk, the tech billionaire disclosed in a social media post on Thursday.

The post included a copy of a letter sent by Musk’s attorney, Quinn Emanuel Partner Alex Spiro, to SEC Chair Gary Gensler.

The letter said that the federal agency had pressured Musk to agree to a settlement including a fine within 48 hours, or “face charges on numerous counts” regarding “Certain Purchases, Sales and Disclosures of Twitter Shares.”

The SEC has been investigating whether Musk, or anyone else working with him, committed securities fraud in 2022 as the Tesla CEO sold shares in his car company Tesla and shored up a stake in Twitter, ahead of his leveraged buyout of the social network which is now known as X.

“Oh Gary, how could you do this to me?” Musk said in the post he shared on X late Thursday, along with an emoji showing a face holding back tears and a copy of Spiro’s letter.

In another post on Thursday, Musk wrote that he, “Asked @Grok to draw a picture of @GaryGensler. Very flattering, I think!” That post contained an AI-generated image portraying the SEC chair as a snail-like creature wearing a suit.

A person directly familiar with the probe, who asked to remain un-named due to the sensitive nature of the matter, told CNBC that the SEC did send a settlement offer to Musk in recent days, but he was given more than 48 hours to respond.

If the SEC cannot reach a settlement agreement with Musk, this person said, charges would not necessarily follow as a next step. When the agency cannot arrive at a settlement agreement with defendants, it will sometimes issue what’s called a Wells Notice before enforcement staff make recommendations to agency commissioners, who then decide whether or not to file charges.

Gensler, Musk and Spiro did not respond to requests for comment on Thursday. 

Musk’s lawyer argued in his letter that the SEC has engaged in “more than six years of harassment” of Musk via investigative activity, including by reopening an investigation into the billionaire’s health tech venture Neuralink this week. 

Spiro also wrote that he had personally been subpoenaed by SEC staff but refused to comply. He accused the agency of an “improperly motivated campaign against Mr. Musk and the individuals and companies associated with him,” and demanded to know whether the White House or the SEC had directed this action against his client.

In 2018, the SEC charged Musk with civil securities fraud after he tweeted that he was considering taking Tesla private at $420 per share and had “funding secured” to do so. No take-private deal ever materialized.

Musk and Tesla each paid $20 million fines to the agency, and struck a revised settlement agreement that required Musk to temporarily relinquish his role as chairman of the board at Tesla. Since that time, Musk has repeatedly expressed his disdain for the SEC.

The Tesla, SpaceX and X leader also became a Republican mega-donor in recent years, and helped propel President-elect Donald Trump back to the White House.

In July this year, Trump vowed to fire the SEC chairman. After Trump’s election victory, Gensler announced that he would be resigning from his post instead.

In a separate civil lawsuit concerning the Twitter deal, which is a focus of the recent SEC probe, the Oklahoma Firefighters Pension and Retirement System sued Musk accusing him of deliberately concealing his progressive investments in the social network, and intent to buy out the company.

The pension fund’s attorneys argued that Musk, by failing to clearly disclose his investments in and intentions to buy Twitter, had influenced other shareholders’ decisions and put them at a disadvantage.

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