The SEC has sued Elon Musk over alleged securities law violations related to his $44 billion acquisition of Twitter, asserting he failed to timely disclose significant stock purchases, which allowed him to save approximately $150 million. Musk’s legal team has dismissed the lawsuit as baseless and part of a broader campaign against him, while the case unfolds amid other investigations and lawsuits stemming from his Twitter takeover. The outcome may be influenced by the priorities of regulators under the incoming administration, which is expected to adopt a more business-friendly approach.

1. SEC Sues Elon Musk Over
Alleged Twitter Securities
Violations
​
​ Source: reuters.com
The SEC sues Elon Musk on Tuesday, alleging violations of securities laws
related to his $44 billion acquisition of Twitter, now rebranded as X. Filed in a
Washington federal court, the suit accuses Musk of failing to disclose his
significant stock purchases in Twitter on time, thereby bypassing a key
regulatory requirement designed to alert investors to substantial market
activity.

2. The SEC asserts that Musk’s delay in disclosing his 5% stake in Twitter
allowed him to continue buying shares at a lower price, saving him
approximately $150 million. Regulatory filings are critical for maintaining
market transparency, particularly for potential takeover bids. Musk’s eventual
disclosure on April 4, 2022, led to a 27% surge in Twitter’s stock price, further
underscoring the significance of the alleged breach.
This lawsuit is the latest in a string of legal battles between Musk and the
SEC, including previous cases over his social media posts about Tesla. With
SEC Chair Gary Gensler set to step down, the case’s trajectory may depend
on the incoming administration’s stance.
Musk Responds to SEC Allegations
Musk and his legal team have resisted the SEC’s claims, describing the
enforcement action as baseless. Alex Spiro, Musk’s attorney, called the
lawsuit a “ticky-tack complaint,” accusing the SEC of harassment and arguing
that Musk had done nothing wrong. Spiro also criticized the lawsuit’s timing,
suggesting it reflects a broader campaign against Musk by regulatory
agencies.
Musk has publicly taunted the SEC over the investigation, sharing
correspondence rejecting settlement offers and mocking the agency in posts
on X. Despite the ongoing legal disputes, Musk maintains his stance that his
actions comply with legal standards.
The SEC sues Elon Musk, highlighting his history of controversial actions
during his takeover of Twitter. Initially a passive shareholder, Musk made a

3. $44 billion purchase offer. He later attempted to back out of the deal but was
compelled to complete it following legal pressure from Twitter’s board.
Broader Implications and Ongoing Investigations
The lawsuit against Musk is part of a larger wave of enforcement actions by
federal regulators during the closing days of the Biden administration.
Observers, such as Columbia Law School Professor Daniel Richman, suggest
these actions may face challenges under the incoming administration, which
is expected to adopt a more business-friendly approach.
Musk’s Twitter acquisition has drawn scrutiny from other agencies, including
the Federal Trade Commission, which investigated X’s privacy practices
following massive staff layoffs. Additionally, former Twitter shareholders have
filed lawsuits accusing Musk of fraud related to his delayed stock disclosure.
Despite the high-profile nature of the case, the SEC sues Elon Musk with a
subdued announcement—released without commentary from top
officials—signaling potential sensitivity about pursuing legal action against one
of the world’s richest individuals and a close advisor to President-elect Donald
Trump. Musk’s prominent role in the new administration, including his
appointment as co-chair of a federal budget task force, adds further
complexity to the unfolding legal saga.
With the SEC’s lawsuit in motion, the outcome will depend not only on legal
arguments but also on the priorities of regulators under the new
administration.