The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing the billionaire of failing to properly disclose his acquisition of Twitter stock in 2022. This move comes as the agency’s chair, Gary Gensler, prepares to step down with the end of President Joe Biden’s administration.
Allegations of Investor Harm
According to the SEC, Musk delayed disclosing his significant stake in Twitter—now rebranded as X—for 11 days, allowing him to buy shares at “artificially low prices.” The agency claims this led to losses exceeding $150 million for investors who sold their shares during this period.
“In total, Musk underpaid Twitter investors by more than $150 million,” the SEC stated.
A Long-Running Feud
This lawsuit marks the latest development in the SEC’s years-long feud with Musk. The billionaire, a prominent Donald Trump supporter and now co-head of the Department of Government Efficiency, has repeatedly clashed with the regulator.
In response to the lawsuit, Musk’s attorney, Alex Spiro, dismissed the case as a “ticky-tack complaint,” asserting that it lacks merit and would result in only a nominal penalty even if proven.
Musk’s history with the SEC includes a 2018 settlement over allegedly misleading tweets about taking Tesla private. He later criticized the agency, calling it a “weaponized institution doing political dirty work.”
Political and Legal Implications
Musk’s political clout adds complexity to the case. As co-head of the Department of Government Efficiency, he is tasked with reviewing federal agencies, including the SEC, for potential budget cuts. The lawsuit may test the agency’s independence under future leadership, with incoming SEC Chair Paul Atkins expected to take a more lenient approach to enforcement.
Former SEC attorney Marc Fagel warned against dismissing the case for political reasons, saying, “SEC enforcement should not be a creature of politics. Political influence or consideration should not be a factor.”
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