Elon Musk, the billionaire behind Tesla, SpaceX, and now X (formerly Twitter), is once again in legal trouble with the U.S. Securities and Exchange Commission (SEC). The regulator has filed a lawsuit against Musk, accusing him of failing to disclose his Twitter stock purchases on time in 2022, a move that allegedly helped him profit unfairly at the expense of other investors.
What Is the SEC Accusing Musk Of?
According to the lawsuit filed in Washington, D.C., the SEC claims that Musk violated federal securities laws by waiting 11 days longer than required to disclose that he had acquired 5% of Twitter’s common shares.
By law, any investor who purchases 5% or more of a public company’s stock must report it to the SEC within 10 calendar days. For Musk, that deadline was March 24, 2022. Instead, he delayed his disclosure until April 4, 2022, by which time he had increased his stake to 9.2%—and Twitter’s stock price jumped over 27% after his announcement.
The SEC argues that this delay allowed Musk to buy over $500 million worth of Twitter shares at artificially low prices, giving him an unfair advantage over the market.
What Does the SEC Want?
The lawsuit seeks to:
Impose a civil fine on Musk
Force him to give up any profits made from the delayed disclosure
Musk eventually purchased Twitter for $44 billion in October 2022, later rebranding it as X.
Musk’s Response: SEC Is ‘Harassing’ Him
Musk’s lawyer, Alex Spiro, dismissed the lawsuit, calling it part of the SEC’s “multi-year campaign of harassment” against Musk.
“Today’s action is an admission by the SEC that they cannot bring an actual case,” Spiro said, adding that Musk had done nothing wrong and that the case is based on a minor paperwork issue.
Musk himself has previously suggested that the delayed disclosure was simply a mistake, not an attempt to deceive investors.
Musk’s History with the SEC
This isn’t the first time Musk has clashed with the SEC. In 2018, he was sued over tweets about taking Tesla private, which he claimed was fully funded. He settled that case by paying a $20 million fine, agreeing to pre-approval for certain tweets, and stepping down as Tesla’s chairman.
More recently, Musk was accused of missing a court-ordered testimony related to the SEC’s investigation of his Twitter stock purchases. A judge later dismissed the request for sanctions, as Musk eventually testified.
What Happens Next?
The case, SEC v. Musk, will now proceed in federal court, where Musk will have to defend his actions. If found guilty, he could face financial penalties or other restrictions.
