The US Securities and Exchange Commission (SEC) has filed a lawsuit against Tesla CEO Elon Musk, claiming he violated disclosure laws when taking over Twitter.
According to the complaint, Musk delayed revealing his purchase, enabling him to buy shares at artificially low prices and save $150 million.
Timeline of Alleged Violation
The SEC requires investors exceeding a 5% stake in a company to disclose their holdings within 10 days.
However, Musk disclosed his Twitter stake 21 days late, after surpassing the 5% threshold.
As a result, Twitter’s stock price surged over 27% on April 4, 2022, when Musk’s purchase was revealed.
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Musk’s Response to the Allegations
Musk has strongly criticized the SEC following the lawsuit.
In a social media post, he described the agency as a “totally broken organization” and accused it of ignoring “actual crimes” while pursuing him.
His attorney, Alex Spiro, labeled the lawsuit as a “sham” and part of a “campaign of harassment.”
SEC Seeks Penalties
The lawsuit, submitted to a federal court in Washington, DC, seeks to hold Musk accountable for his actions.
The SEC demands Musk return profits deemed “unjust” and pay a fine as a penalty for his alleged misconduct.
History of Musk’s Legal Battles with the SEC
Musk’s disputes with the SEC are not new.
In 2018, the agency charged him with fraud over claims that he had “funding secured” to take Tesla private. The settlement required him to step down as Tesla’s board chairman and imposed restrictions on his social media posts.
Since then, tensions between Musk and the SEC have persisted, particularly under the leadership of SEC Chairman Gary Gensler.
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Political Context
The lawsuit comes amid significant political shifts. Gary Gensler recently announced plans to step down in January 2025 when President-elect Donald Trump’s administration begins.
Trump has vowed to replace Gensler on his first day in office.
Musk, a known ally of Trump, has found himself at the center of these political and regulatory dynamics.
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What’s Next for Musk?
Musk’s acquisition of Twitter, which he rebranded as X in October 2022, continues to draw scrutiny.
The SEC’s latest case adds to his ongoing legal and regulatory challenges.
As the lawsuit unfolds, questions arise about how it may impact Musk’s ventures and investor confidence.
