SEC Files Lawsuit Against Elon Musk Over Twitter Stock Purchase
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he failed to disclose his acquisition of more than 5% of Twitter’s stock in 2022 within the required timeframe. The delay allegedly allowed Musk to buy additional shares at artificially low prices, saving him over $150 million, according to the SEC.
The lawsuit, filed in Washington, D.C., claims Musk purchased the stock in March 2022 but did not report surpassing the 5% ownership threshold until April 4, 2022—11 days past the SEC’s 10-day disclosure deadline. By the time Musk made his stake public, he owned over 9% of Twitter shares. Share prices rose by more than 27% after his disclosure. Later that year, Musk acquired the platform for $44 billion and rebranded it as X.
“Musk's violation resulted in substantial economic harm to investors," the SEC stated in its complaint. The agency is seeking a civil fine and the return of any unjust profits Musk may have made from the transactions.
Musk labels SEC as a “broken organisation”
Musk has dismissed the lawsuit, calling the SEC a “totally broken organization.” His attorney, Alex Spiro, labeled the case a “sham” and part of a campaign of harassment. “Musk has done nothing wrong, and everyone sees this sham for what it is,” Spiro said.
This isn’t Musk’s first clash with the SEC. In 2018, the agency accused him of misleading investors with tweets about taking Tesla private. Musk settled those charges but has since remained a vocal critic, saying he does “not respect the SEC.”
The SEC has been scrutinizing Musk’s stock purchases for years, but the investigation gained more attention after Musk missed scheduled testimony sessions with the agency. The SEC even sought sanctions when Musk skipped a session to attend a SpaceX launch in September. Despite offering a settlement to resolve the dispute, Musk rejected the proposal, accusing the SEC of an “improperly motivated campaign” against him.
The lawsuit comes just days before SEC Chair Gary Gensler’s planned departure. Gensler, who has been critical of Musk, will step down as President Biden’s term ends, with Paul Atkins, a former SEC commissioner, expected to take over under President-elect Donald Trump. Atkins has previously expressed opposition to heavy fines, raising questions about how the case might proceed under new leadership.
Marc Fagel, a former SEC attorney, warned against political interference in the agency’s enforcement efforts. “SEC enforcement should not be a creature of politics,” he said.
Musk’s new role in the Department of Government Efficiency (DOGE) under Trump’s administration adds another layer of complexity. Tasked with reducing bureaucracy and restructuring agencies, Musk now wields significant political influence, potentially affecting the outcome of his battle with the SEC.
