San Francisco, Calif. — Elon Musk is moving to dismiss a lawsuit filed by U.S. regulators who contend he improperly delayed disclosing an increase in his stake in Twitter, which he later acquired outright and rebranded as X. The U.S. Securities and Exchange Commission (SEC) claims Musk failed to announce his expanded holdings within the mandated timeframe.
In its January complaint, the SEC alleges that Musk had accrued more than 5% of Twitter before he officially disclosed his investment, a delay that purportedly saved him approximately $150 million by allowing him to buy shares at lower prices. Musk’s legal team argues the lawsuit is an unnecessary expenditure of court resources.
The SEC maintains that Musk missed crucial deadlines, specifically asserting that he should have reported crossing the disclosure threshold by March 14, 2022. However, Musk did not make his announcement until April 4, 2022. The agency claims this oversight led to “substantial economic harm” for investors.
In response, Musk’s attorneys filed a formal motion stating that the SEC’s allegations do not claim any direct harm to investors. They argue that Musk’s late filing of a beneficial ownership form was promptly corrected upon its discovery. They stressed that “there is no ongoing violation, no intent, and no harm” linked to the incident.
This lawsuit is not the first time Musk has faced scrutiny from the SEC. Previous investigations related to his purchase of Twitter included two depositions, though it remains uncertain if he attended a third interview. Musk has criticized the SEC on social media, describing it as a “totally broken organization.”
In their recent filing, Musk’s lawyers accused the SEC of engaging in a “relentless pursuit” of the entrepreneur. They highlighted that the commission’s request for monetary penalties is disproportionately larger than those sought in similar cases against other individuals, suggesting that Musk is being targeted for his vocal opposition to governmental oversight.
The filing paints a picture of ongoing scrutiny against Musk, referencing past investigations, including one where he was ultimately cleared by a jury regarding a tweet about Tesla’s ownership.
As the legal proceedings unfold, the SEC has yet to publicly respond to Musk’s latest claims.
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