SEC Sues Elon Musk Over Alleged Disclosure Violations in Twitter Stock Acquisition

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing him of failing to properly disclose his growing ownership stake in Twitter – now rebranded as X – in a timely manner, as required by federal law. The SEC claims this delay allowed Musk to purchase shares at “artificially low prices,” costing other investors over $150 million.

According to the complaint, Musk began acquiring Twitter shares in early 2022 and surpassed the 5% ownership threshold by mid-March. Under federal regulations, he was required to disclose this stake to the SEC within 10 days but allegedly failed to do so until April 4, 2022. By that time, Musk had increased his ownership to over 9%, prompting a 27% surge in Twitter’s stock price after his disclosure.

“Musk paid significantly less for the shares of Twitter common stock he purchased between March 25, 2022, and April 1, 2022, than if he had timely disclosed his stake,” the SEC alleged in the complaint filed in federal court in Washington, D.C.

In response, Musk’s lawyer, Alex Spiro, dismissed the lawsuit as baseless, stating, “Musk has done nothing wrong” and accusing the SEC of harassment. Spiro characterized the complaint as a minor issue involving an administrative filing error that would carry only a nominal penalty if proven.

The lawsuit also highlights that Musk’s stake in Twitter reached over 7% by March 24, 2022, and he continued purchasing shares in subsequent days. During this period, he reportedly expressed interest in acquiring the company to its board members. By the time Musk formally disclosed his stake and joined Twitter’s board in early April 2022, he had spent more than $500 million acquiring shares.

This lawsuit comes amid longstanding tensions between Musk and SEC Chair Gary Gensler, who is set to step down this month as President-elect Donald Trump assumes office. Musk, a vocal supporter of Trump, has openly clashed with Gensler, mocking him on the X platform and criticizing the agency’s enforcement actions.

The SEC has been investigating Musk’s purchase of Twitter shares for months. In December, Musk revealed on social media that the agency demanded he pay a fine to settle allegations related to the acquisition. Musk also faced scrutiny last year for failing to appear for testimony in the SEC’s investigation.

As Gensler exits his role, the future of the lawsuit remains uncertain, particularly with Musk now positioned as co-head of the incoming administration’s Department of Government Efficiency. Critics argue that political dynamics may influence whether the case proceeds under new SEC leadership.