The Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, a move that some will undoubtedly label as politically motivated.
Musk, according to the SEC, failed to file a beneficial ownership report in a timely manner when he acquired 5%+ of Twitter – now X.
Musk took over X in a move that has been described as saving free speech in the US after documents emerged that Twitter colluded with the government to censor information that was deemed not to be acceptable by members of the Democrat establishment. Today, under Musk’s guidance, X is viewed as a balanced platform that facilitates different political perspectives.
The SEC alleges that Musk saved approximately $150 million by not revealing his stake in the then-public firm as required by reporting rules.
The SEC’s complaint claims that in early 2022, Musk began to acquire shares of Twitter. By March 14, 2022, Musk had acquired over 5% of common shares and failed to file the beneficial ownership as mandated. He continued to purchase more than $500 million worth of Twitter common stock. The purchase of shares was allegedly made at discounted prices, thus harming Twitter shareholders.
The complaint alleges that on April 4, 2022, eleven days after a report was due, Musk finally disclosed his beneficial ownership in a report with the SEC
Eventually, Musk acquired Twitter, which is now a private firm.
The enforcement action against Musk arrives during the last week of current SEC Chair Gary Gensler’s leadership as he will exit the Commission on January 20th – the day of President-elect Donal Trump’s inauguration.
Musk has emerged as a key advisor and financial backer of Donald Trump. He will help guide DOGE or the Department of Government Efficiency, which aims to reduce government spending by reducing waste. One target may be the numerous agencies engaged in financial regulation.
Chair Gensler has long been the target of disdain for most Republicans in Congress, as well as some Democrats, due to his anti-innovation perspective – especially regarding digital assets. The Trump administration has voiced its support for crypto, contrasting the outgoing Biden administration, which vilified the new technology.
It is not immediately clear what will happen to the enforcement action once a new Chair leads the Commission.
