The SEC has sued Elon Musk in federal court over an alleged securities violation

The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday in federal court, alleging that he misled shareholders during his acquisition of Twitter stock in 2022, prior to taking over the company.

The SEC claims Musk violated federal securities laws by failing to disclose his purchase of more than $500 million in Twitter shares—later rebranded as X—within the required timeframe. This delay allegedly allowed Musk to acquire the company at "artificially low prices," resulting in underpaying by over $150 million, according to the lawsuit.

"Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices," the SEC stated. The agency accused Musk of delaying the disclosure of his stake for 11 days, preventing the market from reflecting the material information of his ownership exceeding five percent of Twitter’s common stock.

Musk completed the $44 billion acquisition of Twitter in October 2022.

SEC Demands and Musk’s Response

The SEC is seeking to have Musk repay the "unjust enrichment" he gained and to impose a civil penalty. The lawsuit also includes a request for a jury trial.

Responding to the lawsuit on X, Musk criticized the SEC, calling it a "totally broken organization," and accused the agency of neglecting real crimes in favor of pursuing cases like this.

The SEC had reportedly offered to settle the case for $178 million, along with an additional $40 million penalty and $45 million in interest. Musk’s attorney, Alex Spiro, described the combined $263 million settlement offer as "exorbitant and unprecedented," emphasizing that the SEC had not accused Musk of willfully intending to harm investors.

Musk has publicly mocked the SEC’s investigation. Last month, he shared a letter from Spiro to SEC Chair Gary Gensler on X, captioned, "Oh Gary, how could you do this to me?" In the letter, Spiro accused the SEC of harassing Musk and engaging in a politically motivated campaign against him, questioning whether the White House played a role in directing the agency’s actions.

Broader Implications and Historical Context

The SEC lawsuit accuses Musk of misleading shareholders in March 2022 when he began acquiring Twitter stock. His purchase of a five percent stake, later disclosed, caused the stock price to rise by over 27%. Musk ultimately acquired Twitter in October 2022.

Spiro has called the lawsuit a "sham," characterizing it as a trivial matter related to Musk’s failure to file a single form under Section 13(d). "Even if proven, [this] carries a nominal penalty," Spiro stated.

The case is likely among the final actions of the SEC under the Biden administration, as Chair Gary Gensler is set to depart on January 20. President-elect Trump has nominated cryptocurrency advocate Paul Atkins to lead the agency. Musk, who has been a major supporter of Trump’s 2024 campaign, reportedly spent over $250 million to assist in his election bid.

This lawsuit marks another chapter in Musk’s long-running feud with the SEC. In 2018, Musk and Tesla paid a combined $40 million settlement after Musk tweeted about potentially taking Tesla private at $420 per share—a claim he later admitted had no concrete basis. Musk has since attempted to overturn the settlement and frequently criticized the SEC’s enforcement actions.

"I want to be clear," Musk stated during a 60 Minutes interview in 2018. "I do not respect the SEC. I do not respect them."

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