The Securities and Exchange Commission (SEC) has filed a high-stakes lawsuit against Elon Musk, accusing the tech billionaire of delaying the disclosure of his Twitter stock acquisitions. The agency claims this delay misled shareholders, artificially suppressed stock prices, and allowed Musk to save over $150 million during his purchase spree.
Filed in Washington, D.C., on Tuesday, the lawsuit marks another chapter in the ongoing friction between the SEC and Musk, who has long criticized the agency’s regulatory practices. The case centers on Musk’s alleged violation of the 13D rule, which mandates that investors disclose ownership of 5% or more in a public company within 10 days. The SEC asserts that Musk delayed his disclosure by 11 days, which unfairly impacted other investors.
The SEC’s lawsuit claims Musk’s delayed filing led some investors to sell their shares at lower prices, unaware of his growing stake in the company. According to the agency, this violated federal securities laws designed to ensure transparency and protect market integrity.
“The 13D rule serves as a critical early-warning system for shareholders,” the SEC stated. “Its enforcement is essential to maintain trust in the financial markets.”
The lawsuit seeks to recover the alleged $150 million Musk saved, impose financial penalties, and enforce stricter compliance with disclosure regulations.
Never one to shy away from controversy, Musk took to X (formerly Twitter), the platform he now owns, to respond. “The SEC is a totally broken organization. They spend their time on s— like this when there are so many actual crimes that go unpunished,” Musk wrote.
Alex Spiro, Musk’s attorney, called the lawsuit a “ticky-tack complaint,” accusing the SEC of pursuing a politically motivated vendetta against Musk.
The lawsuit adds to a history of friction between Musk and the SEC. In 2018, Musk settled unrelated charges with the agency over misleading tweets about taking Tesla private. More recently, in October 2023, Musk called for a “comprehensive overhaul” of federal regulatory agencies, accusing them of abusing their power.
The lawsuit comes just as the SEC undergoes leadership changes. Gary Gensler, the current SEC chairman, is stepping down, and President-elect Donald Trump has nominated Paul Atkins, a Republican lawyer skeptical of heavy-handed SEC enforcement, to succeed him.
The SEC’s five-member commission, which is currently split along party lines, will soon shift to a Republican majority as Democratic Commissioner Jaime Lizàrraga and Gensler prepare to depart. This transition could significantly impact how the lawsuit against Musk proceeds under the incoming administration.
Musk, a vocal supporter of Trump, has already sparked questions about potential conflicts of interest. He has also taken a leading role in a Trump-era initiative called the Department of Government Efficiency, which aims to cut federal spending and reduce regulatory oversight.
The SEC’s enforcement of the 13D rule is not unprecedented. In March 2024, HG Vora Capital Management was fined $950,000 for a similar violation involving its stake in the trucking firm Ryder.
Marc Fagel, a former SEC regional director, emphasized the importance of enforcing disclosure rules. “If you can get away with it when it’s front-page news, why bother to comply at all?” he said.
The case against Musk will test the SEC’s independence and highlight the challenges of regulating high-profile figures in a politically charged environment. Critics argue that the agency’s timing, just days before the Biden administration leaves office, raises questions about its motives.
Supporters of Musk see the lawsuit as an overreach, reflective of the broader tension between innovation and regulation. “The SEC is making an example out of Musk because he’s disrupting the status quo,” said one legal analyst.
However, others contend that even influential figures like Musk must adhere to the same rules as everyone else. “Transparency is non-negotiable in financial markets,” Fagel stated.
As the lawsuit unfolds, Musk’s approach will likely mirror his past strategies: a mix of legal challenges, public rebuttals, and rallying his substantial online following. His attorneys are expected to question the SEC’s motivations and argue that any delays in disclosure were unintentional or immaterial.
Regardless of the outcome, the case underscores the high stakes involved in regulating financial markets and influential individuals. It also sets the stage for how the SEC will navigate its enforcement priorities under new leadership.
The lawsuit could be a defining moment for both Musk and the SEC. For Musk, it’s another battle in his ongoing war with federal regulators. For the SEC, it’s a test of its ability to enforce rules impartially amid shifting political dynamics.
While it remains unclear how the case will conclude, it is certain to have lasting implications for the tech mogul, the agency, and the broader conversation about regulation in the digital age.
4 Comments
This is ridiculous. Everybody in the world knew that Musk was buying Twitter long before he actually did. And the day he officially bought it, the news was all over the internet. No one could say that “investors didn’t know” for 11 days.
Here again we have a leftist run organization establishing a president that will undoubtable come back to haunt them when conservatives return to control. The pettiness of this instance is very revealing and will yield far reaching negatives for liberals going forward.
Absolutely!!!
Horse shit! I quote: “others contend that even influential figures like Musk must adhere to the same rules as everyone else. “Transparency is non-negotiable in financial markets,” Fagel stated.
Really now, where is all of this “Transparency” been with the Whole Biden Administration and especially the DOJ that has been weaponized to go after anyone the Demoncrap party or Biden want to run through the wringer or destroy!
Demoncrap party of, “Do as I say not as I do!”