US securities regulators sued Elon Musk in federal court in Washington on Tuesday in an enforcement action arising from his $44 billion purchase of Twitter, now called X. The lawsuit against Musk, who has become a close adviser to Prez-elect Donald Trump, is likely to be one of the more contentious final acts of the Securities and Exchange Commission under Gary Gensler, its departing chair. It could also be undercut in just a few days, when Trump appoints new leadership to take charge of the regulator.
The SEC contends that in buying Twitter in 2022, Musk violated securities laws by amassing a large stock position in the social media company without filing the proper notification. The complaint said he had waited 11 days before filing the required disclosure with the SEC. The regulatory filings are required so investors in the marketplace can monitor the moves of large investors and potential takeover bids.
Because Musk did not disclose his position, he was able to continue buying Twitter stock at an artificially low price, the SEC said in its lawsuit. The move “allowed him to underpay by at least $150 million” for the additional shares.
Over the past few weeks, Musk had taunted the SEC in posts on X about the potential for filing a lawsuit. On Tuesday, his lawyer Alex Spiro denounced the regulator’s latest filing. “Today’s action is an admission by the SEC that they cannot bring an actual case, because Musk has done nothing wrong and everyone sees this sham for what it is,” Spiro said. The agency had waged a “multiyear campaign of harassment” against Musk but filed “a single-count ticky-tack complaint,” he added.
