Billionaire entrepreneur Elon Musk has asked a U.S. federal court to dismiss a lawsuit filed by the Securities and Exchange Commission (SEC), which accuses him of delaying disclosure of his multibillion-dollar stake in Twitter, now X, in 2022.
The SEC’s complaint, filed in Washington, D.C. in January, alleges Musk violated federal securities law by waiting 11 days beyond the required deadline to report his acquisition of 5% of Twitter’s shares. The regulator is seeking civil penalties and the forfeiture of profits it claims Musk gained by purchasing more than $500 million worth of shares at artificially low prices before publicly announcing his holdings on April 4, 2022. By that date, Musk had accumulated a 9.2% stake.
Under SEC rules, investors must disclose acquisitions exceeding 5% ownership within 10 days. Musk’s lawyers, however, argued that he halted further purchases before filing and submitted the disclosure one business day after his wealth manager consulted with legal counsel. They said the SEC’s case lacks merit and amounts to retaliation against Musk for his criticism of government 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,” his legal team said.
The case is the latest in a string of clashes between Musk and the SEC, which previously sued him in 2018 over tweets claiming he had secured funding to take Tesla private.
