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The Securities and Exchange Commission launched a significant legal probe against Elon Musk on January 14, 2025, alleging he deliberately delayed disclosing his Twitter ownership to acquire additional shares at artificially depressed prices. The federal lawsuit, filed in Washington DC, claims this delay cost other shareholders at least $150 million.
According to the SEC's complaint, Musk crossed the crucial 5% ownership threshold on March 24, 2022, triggering a mandatory disclosure requirement. Instead of promptly filing the beneficial ownership report, Musk continued purchasing shares for 11 more days before revealing his position. When he finally disclosed his stake on April 4, 2022, it had grown to more than 9%, causing Twitter's stock price to surge by 27% in a single day.
The timing of this lawsuit is particularly notable, coming during SEC Chairman Gary Gensler's final week in office before his January 20 departure. The action represents the culmination of a lengthy regulatory scrutiny of Musk's financial dealings, including a previous investigation into potential insider trading involving Musk and his brother Kimbal's Tesla stock sales.
Musk's legal team has responded forcefully to the allegations. His attorney, Alex Spiro, dismissed the case as "an admission" that the SEC lacks substantial evidence, characterizing it as "a single-count ticky-tack complaint" resulting from a "multi-year campaign of harassment" against his client.
The lawsuit's political context adds another layer of complexity. With President-elect Donald Trump's nominee Paul Atkins poised to take over the SEC, Musk's regulatory landscape could shift significantly. Musk has recently strengthened his ties with Trump, making substantial campaign contributions and accepting a proposed role as head of a new "department of government efficiency" in Trump's planned administration.
The SEC is seeking substantial remedies, including the return of Musk's alleged illegal profits and additional civil penalties. The case highlights the ongoing tension between federal regulators and one of the world's most prominent business figures, who later acquired Twitter for $44 billion and rebranded it as X.
