With time running out for the Biden administration, the U.S. Securities and Exchange Commission has filed a federal lawsuit against Elon Musk. The current law is relatively simple. The timing of filing a complaint is more complicated.
The SEC's complaint focuses on Musk's acquisition of Twitter stock in early 2022. The complaint says Musk failed to notify authorities within 10 calendar days that he had acquired more than 5 percent of the company's common stock. If true, the delay would violate federal security law. “As a result, Mr. Musk was able to continue purchasing stock at artificially low prices,” the SEC alleges, adding that “at least one “We are now able to pay less than $50 million.” The SEC requested a jury trial.
This should all be very easy. “This appears to be a simple case of clear violations of established SEC rules,” said James Park, a professor at the University of California, Los Angeles School of Law, who specializes in securities regulation and corporate law. You either have to submit your documents within 10 days or you don't. The SEC claims Musk did not do that. The agency alleges that Musk acquired enough stock to exceed that threshold by March 14 of that year and did not publicly disclose his ownership until April 4. (March 24) claims that technically it was delayed by 11 days because Musk continued to acquire stock.
Still, it took nearly three years for the SEC to file a lawsuit. “The question is why are they doing it now,” says David Rosenfeld, former co-head of the SEC's New York Enforcement Division and now a professor at Northern Illinois University School of Law. “The only possible answer is that we want to get it done before the administration changes.” Rosenfeld noted that he did not review the SEC's complaint in detail.
A change in the executive branch that will take place in less than a week will create a more favorable regulatory environment for Mr. Musk. Musk has donated hundreds of millions of dollars to political action committees supporting Donald Trump's presidential campaign and is reportedly close to the president-elect. During the transition period. Current SEC Chairman Gary Gensler is likely to be replaced by Trump appointee Paul Atkins, who is widely seen as a supporter of deregulation.
Mr. Musk's lawyer, Alex Spiro, said he believed the charges were parting ways. “The SEC's multi-year harassment campaign against Mr. Musk culminated in the filing of a single tick-tock complaint against Mr. Musk as the SEC retreats and steps down,” he said in an email.
The accusations were made just before President Trump's inauguration on January 20, but the investigation that led to them has been years in the making. The agency was required to subpoena Musk in May 2023 to testify in the investigation, but two days before his scheduled testimony in September 2023, Musk announced he had canceled the subpoena. A federal court upheld an earlier decision to force him to testify in May 2024. SEC lawyers flew to meet with him on September 10, but he again asked his team to attend the SpaceX launch.
