SEC Sues Elon Musk for Delay in Twitter Stock Disclosure

Details of the SEC’s findings

The SEC claims Musk privately informed a Twitter board member on March 27, 2022, that he owned at least 7 percent of the company. He also reportedly expressed interest in joining the board and taking the company private.

The lawsuit alleges that these discussions further underscore the significance of his delayed disclosure, as it deprived the public and existing shareholders of critical information that could have influenced trading decisions.

The SEC also says that it has obtained private text messages and other communications between Musk and Twitter’s board, suggesting a detailed investigation into the timeline and nature of his stock purchases.

These messages are expected to play a pivotal role in the case as the agency attempts to establish intent and the extent of any regulatory violations.

Musk's response

Musk’s legal team has dismissed the allegations, with his attorney, Alex Spiro, accusing the SEC of engaging in a "multi-year campaign of harassment" against the billionaire entrepreneur.

Spiro maintains that Musk complied with disclosure rules and has argued that the agency’s claims lack merit.

Musk has frequently clashed with the SEC in the past, often criticizing the regulator's actions and oversight. This lawsuit adds another layer to the contentious relationship between Musk and the agency.

The lawsuit arrives at a critical juncture as Musk prepares to assume a high-profile role in the Trump administration's newly created Department of Government Efficiency, raising questions about potential conflicts of interest.

The SEC's leadership is also set to change, with current Chair Gary Gensler planning to step down ahead of the administration transition.

Musk’s acquisition of Twitter, which was finalized in October 2022 for US$44 billion, transformed the platform into X. The deal and its fallout, including significant changes to operations and policies, have kept X in the spotlight.

Shares of Musk's electric vehicle company Tesla were unscathed by the new SEC lawsuit. They were up 7.48 percent year-to-date gain as of midday on Wednesday (January 15).