As the Biden administration's time ran out, the U.S. Securities and Exchange Commission sued Elon Musk in federal court. The current regulations are relatively simple. The timing of complaints is more complicated.
The SEC's complaint focuses on Musk's acquisition of Twitter stock in early 2022. According to the complaint, Musk did not notify the agency that he had acquired more than 5% of the company's common stock within 10 calendar days. If true, that delay would violate federal security laws. “As a result, Musk was able to continue purchasing shares at artificially low prices,” the SEC said. accusation“allowed him to underpay by at least $150 million for the shares he purchased after the beneficial ownership reporting was due.” The SEC requested a jury trial.
All of this should be quite simple. “It appears to be a straightforward case of a clear violation of a long-standing SEC rule,” said James Park, a professor at UCLA School of Law who focuses on securities regulation and corporate law. . You can submit documents within 10 days or not; The SEC claims that Musk did not do so. The agency alleges that he bought enough shares to surpass that threshold by March 14 of that year and did not make his ownership public until April 4. (The SEC alleges that technically , Musk was 11 days late when he continued buying shares through March 24.)
However, it took nearly three years for the SEC to file a lawsuit. “The question is why are they doing it now,” said David Rosenfeld, former director of the SEC's New York enforcement office and now a professor at Northern Illinois University School of Law. “The only reasonable answer is that they want to get it done before the administration changes.” Rosenfeld noted that he did not look into the SEC's complaint in depth.
The change in executive branch, which takes place in less than a week, will create a more favorable regulatory environment for Musk, who donated hundreds of millions of dollars on political action committees supporting Donald Trump's presidential campaign and is said to be a close advisor to the president-elect during the transition period. Current SEC Chairman Gary Gensler will likely be replaced by Trump's nominee Paul Atkins, who is widely seen as pro-policy Lighter touch adjustment.
Musk's lawyer, Alex Spiro, said he believes the complaint is a farewell. “When the SEC withdrew and left office, the SEC's multi-year harassment campaign against Mr. Musk culminated with the filing of a very small complaint against Mr. Musk,” he wrote in an email.
Although the filing came just before Trump's inauguration on January 20, the investigation that led to this complaint has been years in the making. The agency had to summon Musk in May 2023 to take his testimony in the investigation and said that Musk canceled them two days before a scheduled hearing that September. A federal court donate the previous decision forced him to testify in May 2024; SEC lawyers flew to interview him on September 10, but he stand up again to attend the SpaceX launch.