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The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing him of failing to properly disclose his acquisition of Twitter stock in 2022.
The regulator alleges the lapse allowed Musk to purchase shares at “artificially low prices,” resulting in a $150 million shortfall for investors who sold their stock during the period.
Musk’s failure to disclose his significant stake in a timely manner harmed investors who sold their shares at prices below what they would have fetched with proper disclosure, the SEC said in its complaint filed in Washington.
The lawsuit centers on an 11-day period during which Musk, the world’s richest person, allegedly delayed revealing his growing stake in Twitter, now rebranded as X. Musk eventually acquired the social media giant for $44 billion.
Musk Fires Back
Alex Spiro, Musk’s attorney, dismissed the SEC’s case as a “ticky-tack complaint” with negligible consequences.
“Today’s action is an admission by the SEC that they have no real case,” Spiro said in a statement. “Everyone sees this sham for what it is.”
Musk, a long-time critic of the SEC, has clashed with the agency before, notably in a 2018 settlement over allegedly misleading tweets about taking Tesla private. In recent years, he has intensified his attacks, describing the regulator as “weaponized” and politically motivated.
Political Overtones and SEC Leadership Transition
The timing of the lawsuit has raised eyebrows, as it coincides with SEC Chair Gary Gensler’s imminent departure. Gensler, a staunch advocate for aggressive enforcement, has been a polarizing figure during his tenure. The case will now likely fall to the next administration, with Paul Atkins, a critic of high penalties, expected to take over as SEC chair.
Legal experts caution against dismissing the case outright, warning it could undermine the agency’s credibility.
“SEC enforcement should not be a creature of politics,” said Marc Fagel, a former SEC regional director. “Tossing this case would raise serious questions about the agency’s independence.”
The Road Ahead
The SEC’s lawsuit against Musk highlights ongoing tensions between the billionaire and the regulatory body. Musk’s significant political influence—as co-head of the Department of Government Efficiency—adds another layer of complexity to the case.
With the case potentially spanning multiple administrations, its outcome could set a precedent for the SEC’s role in policing financial markets under politically charged circumstances.
