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Gary Gensler, the outgoing head of the SEC, has green-lighted a lawsuit against Elon Musk as one of his last official acts in office, setting the stage for a messy court battle ahead.
Today the SEC sued @elonmusk for filing a Schedule 13D form 11 Days late.
The SEC waited 33 Months after the alleged violation to file the suit—6 days before Gary Gensler’s departure as Chairman of the SEC. https://t.co/mYD1XPZjO4
— MetaLawMan (@MetaLawMan) January 15, 2025
As we've noted previously, Elon Musk only disclosed his initial 9.2 percent stake in Twitter - now rebranded as X - on the 04th of April 2022. As per the SEC's assessment, Musk crossed the 5 percent ownership threshold in March 2022. As such, he was required to disclose his ownership interest in Twitter by the 24th of March. By delaying this critical intimation, the SEC now believes Elon Musk underpaid for those Twitter shares, to the tune of $150 million.
Bear in mind that the Hart-Scott-Rodino Act mandates prompt disclosure - typically within ten days - when any person or entity acquires a stake of at least 5 percent in a public company.
In May 2024, Elon Musk had agreed to testify in the SEC's ongoing investigation but ultimately did not comply with the agency's deposition request, prompting the SEC to seek sanctions against the CEO of Tesla in a San Francisco federal court.
In December 2024, Elon Musk's attorney, Alex Spiro, disclosed that the SEC had demanded that Musk agree to a settlement offer within 48 hours or face "charges on numerous counts." At the time, Spiro had also disclosed a separate SEC investigation of Neuralink - Elon Musk's brain interface company. In his public letter blasting the SEC, Spiro had rejected any intent to settle the forthcoming charges with the agency.
Coming back, the SEC has also alleged in its lawsuit that Elon Musk acquired Twitter shares worth $500 million between the time when an initial intimation was due and the 04th of April 2022, when the CEO of Tesla actually disclosed his initial stake. According to the agency, this delay allowed him to purchase Twitter shares from "unsuspecting public at artificially low prices."
