- SEC files a lawsuit against Elon Musk for securities law violations.
- Investors reportedly lost $150M due to underpaid stock transactions.
The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk, alleging that he violated federal securities laws during his 2022 purchase of Twitter, now known as X. The SEC claims Musk failed to disclose his ownership stake in Twitter promptly, allowing him to buy shares at “artificially low prices.”
By March 2022, Musk had acquired over 5% of Twitter’s outstanding stock. Federal law required him to disclose this ownership within ten calendar days. Instead, Musk delayed until April 4, 2022, surpassing the deadline by 11 days. The SEC alleges that this delay saved Musk over $150 million by enabling him to buy shares from uninformed investors.
The SEC’s complaint, filed in Washington, D.C., highlights Musk’s substantial purchases between March 25 and April 1, 2022, totaling more than $500 million. Following Musk’s eventual disclosure, Twitter’s stock price surged by 27%, reflecting investor enthusiasm about his involvement.
Is Musk vs. SEC Politically Motivated?
Musk denies the allegations, labeling the SEC’s actions as politically motivated. In a post on X, he criticized the agency, calling it a “broken organization” focusing on trivial matters while ignoring major issues. His lawyer, Alex Spiro, dismissed the lawsuit as baseless, accusing the SEC of harassing Musk through a “ticky-tack complaint.”
The lawsuit comes during the SEC’s transition period. Chairman Gary Gensler announced his resignation following President-elect Donald Trump’s election victory. Trump’s administration plans to nominate Paul Atkins as the new SEC head. Musk, a Trump supporter, has been appointed co-head of the Department of Government Efficiency.
In addition to the SEC lawsuit, Musk faced a legal challenge from the Oklahoma Firefighters Pension and Retirement System in 2022. The group accused Musk of concealing his investments in Twitter to manipulate the stock price, disadvantaging other shareholders.
The SEC’s complaint seeks disgorgement of Musk’s alleged gains and civil penalties. The case underscores Musk’s ongoing clashes with regulatory authorities, including past conflicts with the SEC over Tesla-related issues.
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