CEO of X Elon Musk is taking his gloves off when it comes to the U.S. Securities and Exchange Commission. Musk filed a motion on Thursday to dismiss the SEC’s civil lawsuit that accused him of waiting too long in 2022 to reveal his large stake in social media platform Twitter, later renamed as X.
The SEC alleged that Musk violated federal securities laws by failing to promptly disclose his ownership after crossing the 5% threshold, delaying the disclosure by 11 days. During this period, Musk reportedly accumulated over $500 million worth of shares at prices the SEC contended were artificially suppressed, increasing his stake to 9.2% by early April 2022. This delay, according to the SEC, deprived other investors of timely information that could have influenced their investment decisions.
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In a complaint filed in Washington, D.C., federal court in January, the SEC said Musk violated federal securities law by waiting 11 days too long to disclose his initial purchase of 5% of Twitter’s common shares, and it sought to force Musk to pay a civil fine and give up profits that the SEC said were a result of the violations.
Musk’s legal team responded by filing a motion to dismiss the lawsuit, arguing that the delayed disclosure was unintentional and corrected promptly once discovered. They also claimed the SEC’s actions were politically motivated and lacked substantive legal grounds. Musk’s defense sought to halt the lawsuit, framing it as an overreach by regulators.
“The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly… Rather, the SEC alleges that Mr. Musk late-filed a single beneficial ownership form three years ago, and fully corrected any alleged error immediately upon its discovery. There is no ongoing violation,” the Tesla and SpaceX CEO’s lawyers said.
This case could set a precedent for how regulators approach disclosure violations in the future, particularly involving powerful industry players.