The SEC sues Elon Musk for alleged securities fraud in Twitter acquisition, as Trump’s second term looms.
At a Glance
- SEC alleges Musk failed to disclose Twitter stake, allowing artificially low share purchases
- Musk’s lawyer calls SEC action a “sham,” criticizes commission as “totally broken”
- Trump’s second term could influence regulatory landscape and SEC leadership
- Lawsuit seeks jury trial, disgorgement, and civil penalties against Musk
SEC Files Lawsuit Against Elon Musk
The Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging securities fraud related to his acquisition of Twitter in 2022. The commission claims Musk failed to properly disclose his stake in the social media platform, allowing him to purchase shares at artificially low prices. This legal action comes as the latest chapter in Musk’s ongoing battles with regulatory bodies and raises questions about corporate governance and transparency in high-profile acquisitions.
According to the SEC, Musk was over 10 days late in reporting his stake in Twitter, potentially underpaying by at least $150 million for the shares he acquired. The lawsuit alleges that by March 2022, Musk owned more than 5% of Twitter shares, which legally required disclosure, but he delayed this announcement until April 4, a day late. This delay allegedly allowed Musk to continue purchasing shares at a lower price, as the stock value would have likely increased had his ownership been public knowledge.
Musk’s Response and Legal Defense
Elon Musk and his legal team have vehemently denied the SEC’s allegations. Musk’s lawyer, Alex Spiro, dismissed the lawsuit as a “sham” and suggested it was an admission of the SEC’s inability to build a strong case against his client. Musk himself took to X, formerly known as Twitter, to criticize the SEC, calling it a “totally broken organization.”
“This action is an admission by the SEC that they cannot bring an actual case,” said Spiro. “Musk has done nothing wrong.”
The billionaire entrepreneur’s camp argues that the SEC’s focus on the alleged $150 million underpayment is negligible compared to Musk’s net worth and the overall $44 billion he paid to acquire Twitter. They contend that this lawsuit is part of a broader pattern of regulatory overreach and harassment against Musk.
the sec is suing elon musk for buying twitter at “artificially low prices” even though he bought it for $44 billion and industry analysts said it was worth more like $30 billion?
nothing makes sense man
— Shibetoshi Nakamoto (@BillyM2k) January 14, 2025
Political Implications and Regulatory Landscape
The timing of this lawsuit is particularly interesting given the political context. With President-elect Donald Trump set to begin his second term, the regulatory landscape could see significant changes. Trump has plans to replace SEC chairman Gary Gensler with Paul Atkins, dramatically shifting the commission’s focus and approach to enforcement.
Musk, who has been critical of excessive regulations, is poised to have influence in the White House during Trump’s second term. Reports suggest that Musk and Vivek Ramaswamy will head a new Department of Government Efficiency (DOGE), focusing on reducing bureaucratic red tape and streamlining government operations.
This shift in the political and regulatory environment could have significant implications for the outcome of the SEC’s lawsuit against Musk and for future enforcement actions against high-profile business leaders.
The Road Ahead
As the legal battle unfolds, questions arise about the future of this case under the new administration. With SEC Chair Gary Gensler planning to step down on January 20, it remains uncertain whether the incoming leadership will pursue the lawsuit.
The case against Musk highlights the complex relationship between innovative business leaders and regulatory bodies, with critics calling the lawsuit another example of a political witch hunt. As the situation develops, it will undoubtedly continue to draw attention from both the business world and political sphere, potentially setting precedents for future corporate acquisitions and disclosures.
