Elon Musk’s lawyers are seeking to get a lawsuit from the U.S. Securities and Exchange Commission (SEC) against the Tesla CEO and X owner tossed out. The case, filed right before President Donald Trump took office this year, centers on Musk’s purchases of Twitter stock before his eventual takeover of the social network in 2022.
The SEC alleges that Musk cheated investors by quietly amassing more than a 5% stake in Twitter without disclosing it within the regulated time frame. By law, once someone hits that threshold, they’re supposed to file paperwork within 10 days to let the rest of the market know. Musk didn’t.
According to the agency, Musk blew past the deadline by 11 days, giving himself extra time to keep buying up stock on the cheap. That meant he was able to buy more shares at a discount before the public knew what he was up to, and Twitter’s stock price inevitably surged when the news became public. He would eventually buy the whole platform for $44 billion later that year and rebrand it as X.
On Thursday, Musk’s lawyers asked a federal judge in Washington, D.C., to toss the case, calling it a “waste of this Court’s time and taxpayer resources.” They also claimed the lawsuit is part of the SEC’s “relentless pursuit” of Musk, pointing out that regulators have subjected him to investigations for nearly a decade.
“The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly,” the court filing reads. “The SEC does not allege that Mr. Musk caused any investor harm. 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.”
The legal fight comes as Musk’s once-close ties with Trump have soured. When the SEC first filed the suit, Musk was one of Trump’s biggest allies, having poured hundreds of millions into his 2024 campaign. At the time, Republican SEC Commissioner Mark Uyeda, who would later serve as acting SEC chair, even asked enforcement staff to formally declare that the case wasn’t politically motivated, Bloomberg reported.
After Trump took office, Musk played a central role in a sweeping government shake-up as the head of the Department of Government Efficiency (DOGE), only to later have a very public falling out with Trump.
How much did investors allegedly lose?
According to the SEC, Musk kept the market in the dark while secretly buying up Twitter shares. He waited 11 days past the deadline before finally disclosing his stake on April 4, 2022. Twitter stock subsequently jumped 27%. By then, he had already spent more than $500 million on extra shares.
“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices,” the complaint reads, adding that he underpaid sellers by more than $150 million.
The complaint also alleges that investors who sold Twitter stock during that period did so at a substantial discount, suffering “substantial economic harm.”
The SEC did not immediately respond to a request for comment from Gizmodo.
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