The Securities and Exchange Commission (SEC) has filed yet another lawsuit against Tesla CEO and X owner Elon Musk, this time accusing him of securities fraud related to his 2022 takeover of Twitter (now X). The lawsuit, filed in a Washington, D.C., federal court, alleges that Musk violated federal securities laws by failing to disclose his acquisition of more than 5% of Twitter’s stock within the required 10-day timeframe, potentially saving him at least $150 million at the expense of shareholders.
Under SEC rules, any investor acquiring more than 5% of a company’s voting equity shares must notify the commission within 10 days to ensure transparency for other stakeholders. Musk began purchasing Twitter shares in January 2022, surpassing the 5% threshold by March 14. However, he missed the SEC’s March 24 deadline to file his disclosure and only did so on April 4, declaring himself a passive investor. This late filing came on a day when Twitter’s stock surged over 27%, and Musk refiled as an active investor the following day.
The SEC alleges that Musk’s delayed filing and false classification as a passive investor allowed him to acquire shares at suppressed prices, constituting securities fraud. The commission’s complaint argues that Musk’s actions deprived shareholders of critical information about his intentions, artificially keeping Twitter’s stock price lower as he continued purchasing shares. The SEC is seeking to recover Musk’s “unjust enrichment” and impose civil penalties.
This lawsuit caps off SEC Chair Gary Gensler’s tenure, during which he has scrutinized Musk’s financial activities. The SEC’s case builds on a similar shareholder lawsuit filed in 2022, which claims Musk’s late filing allowed him to save $143 million on Twitter stock purchases during a six-day window. Musk’s defense hinges on his assertion that the late filing was a “mistake,” which his attorney, Alex Spiro, argues does not amount to fraud. Spiro has dismissed the SEC’s lawsuit as a “sham,” and Musk himself has called the SEC a “totally broken organization” on X.
The timing of the lawsuit is significant, as President-elect Donald Trump has nominated Paul Atkins, a former SEC commissioner, to succeed Gensler. Atkins is expected to take a more restrained approach to regulation, leaving the future of this lawsuit uncertain under new leadership.
For conservatives, this case highlights ongoing concerns about government overreach and regulatory zealotry. Musk, a vocal critic of bloated bureaucracies and a champion of free speech, has become a frequent target of the SEC’s scrutiny. The commission’s repeated clashes with Musk exemplify how regulatory bodies can weaponize their authority against innovators who challenge the status quo.
This lawsuit also underscores the broader tension between Democrats and high-profile business leaders who reject their narrative. While Musk builds rockets and electric cars and revitalizes free speech platforms, the SEC seems more interested in litigating delays in paperwork. The American public deserves agencies that focus on enabling economic growth and innovation, not stifling them with endless lawsuits.
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