U.S. Securities and Exchange Commission (SEC) Sues Elon Musk Over Delayed Disclosure During Twitter Acquisition
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk in January 2025 during the Biden administration for delaying the disclosure of his stockholding during the acquisition of Twitter (X) in 2022. An internal SEC vote was held to determine whether to prosecute Musk, which ultimately passed with a 4 to 1 vote. The sole dissenting vote came from current SEC Acting Commissioner ### Mark Uyeda.
Given that the timing of the lawsuit coincides with a transition in U.S. political parties, there are concerns about potential political motivations and selective enforcement. The Trump administration has also initiated investigations aimed at uncovering whether the SEC and other agencies engaged in politically motivated selective enforcement during the Biden administration. The SEC has yet to respond to this.
Musk Delayed Disclosure, Saving $150 Million on Acquisition Costs
According to reports, under U.S. regulations, if an investor holds more than 5% of a company’s shares, they must file with the SEC within 10 days. However, Musk delayed his disclosure for 21 days in April 2022, resulting in a 27% increase in Twitter’s stock price, allowing him to buy more shares at a lower price. It is estimated that this delay saved him approximately $150 million.
The SEC considers this to be unjust enrichment and has launched an investigation. Musk responded that the delay was due to a misunderstanding of the rules, rather than an intentional concealment. Ultimately, the SEC did not press charges regarding the intent behind the delay.
SEC Met with Musk Three Times; Standoff Lasted Over a Year
The SEC interviewed Musk in 2022 but was rejected for the third time, prompting the SEC to petition the court to compel Musk to testify. Musk eventually appeared in court on October 3, 2024, and the prolonged standoff led to the case remaining unresolved before the U.S. presidential election.
The SEC had attempted to settle the matter privately, but Musk publicly refuted this.
SEC Attempted to Settle with Musk, Who Publicly Rebuked Them
In December 2024, the SEC attempted to reach a settlement with Musk, proposing a fine in exchange for case closure. Musk not only rejected the offer but also publicly shared the attorney’s letter on Twitter (X), accusing the SEC of giving him only 48 hours to decide whether to settle, which he deemed insincere. This led to a complete breakdown in negotiations.
Divergence Within SEC Regarding Whether to Prosecute
In January 2025, just before the Republican Party officially took over the SEC, five SEC commissioners voted in a closed-door meeting:
- 4 voted in favor: three Democratic commissioners and Republican commissioner Hester Peirce.
- 1 against: current SEC Acting Commissioner ### Mark Uyeda.
Reports indicate that both Uyeda and Peirce had reservations about the SEC’s actions. Nevertheless, Peirce ultimately voted in agreement with the three Democratic commissioners.
Acting Commissioner Questions Political Motives, Request for Internal Guarantees Denied
Uyeda not only cast a dissenting vote but also requested that the SEC enforcement personnel responsible for investigating Musk’s case sign a guarantee stating “this case has no political motives.” However, this request was denied internally, as it was not part of the SEC’s standard procedure, indicating Uyeda’s significant skepticism regarding the political neutrality of the case.
Criticism Over Delayed Prosecution
Some experts have pointed out that the SEC took nearly two years to take action, raising questions about the timing. A former SEC attorney remarked, “If you want to file charges, you should have done it sooner for credibility.” However, other lawyers believe that failing to file charges altogether would subject the SEC to accusations of selective enforcement.
Trump Administration Reviews Biden-Era Enforcement Cases; Musk Must Respond by April 4
Since the Trump administration took office, they have initiated reviews and examinations of investigations conducted by the SEC and other government agencies during the Biden administration, aimed at uncovering any politically motivated selective enforcement. The SEC is currently unwilling to comment on this. According to documents, Musk must formally respond to this case by April 4.
(Twitter Stock Case Heats Up Again! Musk to Testify on April 3)
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