The Biden-Harris administration’s U.S. Securities and Exchange Commission (SEC) announced a lawsuit on Tuesday against Tesla CEO and X owner Elon Musk just days before President-elect Donald Trump’s inauguration.
In a Tuesday press release, the SEC announced it had filed “an action” against Musk over claims that he “failed to timely file a beneficial ownership report with the Commission after acquiring beneficial ownership of more than five percent of the outstanding shares of Twitter, Inc. common stock.” The SEC claimed that Musk’s failure to timely file a report with the SEC allowed him to underpay for shares “by at least $150 million” in 2022 prior to his purchase of X, formerly Twitter.
In Tuesday’s press release, the SEC accused Musk of violating the “beneficial ownership reporting requirements” that fall under the Securities Exchange Act of 1934.
The Associated Press reported that Musk started acquiring Twitter shares in 2022 and owned over 5% of the company’s shares by March of 2022. The Biden-Harris administration’s SEC claimed that Musk was legally required to disclose his stake in Twitter; however, the SEC said he did not report his ownership until 11 days after he was required to.
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“After Musk failed to timely file a beneficial ownership report by March 24, 2022, he purchased more than $500 million worth of Twitter common stock between March 25, 2022 and April 1, 2022,” the SEC wrote. “As alleged, because Musk failed to timely file a beneficial ownership report with the SEC, he was able to make these purchases of Twitter common stock at artificially low prices from the unsuspecting public, who had not yet priced in the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose.”
In response to the SEC lawsuit, Alex Spiro, Musk’s lawyer, told Fox Business that the action taken Tuesday by the Biden-Harris administration is “an admission by the SEC that they cannot bring an actual case – because Mr. Musk has done nothing wrong and everyone sees this sham for what it is.”
Spiro added, “As the SEC retreats and leaves office — the SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tack complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty.”
In a Wednesday post on X, Musk tweeted, “Lawfare needs to stop. Instead of fighting real crime, under the Democrats, citizens are prosecuted, while serious criminals run free.”
The Associated Press reported that it is not yet clear whether the SEC will move forward with the lawsuit against Musk under the Trump administration after SEC Chairman Gary Gensler steps down from his position.
