Billionaire Elon Musk filed a motion on Thursday seeking dismissal of the US Securities and Exchange Commission’s (SEC) civil lawsuit, which alleges he delayed reporting his large stake in social media platform Twitter, later renamed X, in 2022.
The SEC filed a complaint in Washington, D.C. federal court in January, claiming Musk violated federal securities law by waiting 11 days too long to disclose his initial purchase of 5% of Twitter’s common shares. The regulator sought civil fines and demanded Musk surrender profits it said resulted from the alleged violations.
Musk’s lawyers argued that he had stopped purchasing additional shares of the then-publicly-listed Twitter and submitted his disclosure one business day after his wealth manager consulted securities disclosure counsel. Under SEC rules, investors must report acquisitions crossing a 5% ownership threshold within 10 calendar days, which in Musk’s case would have been by 24 March 2022.
The SEC contended that Musk bought more than $500 million of Twitter shares at artificially low prices before publicly revealing his holdings on 4 April 2022, by which time he owned a 9.2% stake. The lawsuit was filed on 14 January, six days before Republican President Donald Trump took office and appointed Musk as a special adviser on federal workforce and spending issues.
Musk faced a court deadline to respond by Friday. His lawyers argued the case should never have been filed and insisted that Musk caused no harm. They stated the SEC’s action “reveals an agency targeting an individual for his protected criticism of government overreach.”
“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.
The SEC did not respond to a request for comment outside regular business hours. Musk has a history of disputes with the regulator, including a 2018 lawsuit over his Twitter posts regarding taking Tesla private and securing funding.
Faridah Abdulkadiri
Follow us on:
