Summary
- Musk waited 11 days too long to reveal 5% Twitter stake
- Musk calls lawsuit wasteful, says he meant no harm
- SEC says Musk violated important disclosure rules
(Reuters) – Elon Musk has asked a federal judge to dismiss a U.S. Securities and Exchange Commission lawsuit claiming he waited too long to disclose his purchases of Twitter shares in 2022, accusing the regulator of overreaching in order to punish him for criticizing it.
The SEC sued the billionaire in January, saying his 11-day delay in revealing his initial 5% Twitter stake let him buy more than $500 million worth of shares at low prices, saving himself $150 million at unsuspecting investors’ expense.
It wants Musk, the world’s richest person, to repay those savings and pay a civil fine.
In a filing late on Thursday night in the Washington, D.C. federal court, Musk maintained that the delay was inadvertent.
He also said he promptly disclosed what had become a 9.2% Twitter stake on April 4, 2022, one business day after his wealth manager checked with lawyers about filing requirements.
Musk bought all of Twitter for $44 billion in October 2022 and renamed it X. His businesses also include electric vehicle maker Tesla and rocket company SpaceX.
The SEC’s “selective enforcement” of its securities laws “reveals an agency targeting an individual for his protected criticism of government overreach,” Musk said.
“There is no ongoing violation. There is no intent. There is no harm,” he added. “Simply put, this action is a waste of this court’s time and taxpayer resources.”
Musk also called a $150 million payout an excessive fine that violates the U.S. Constitution’s 8th Amendment and dwarfs the $100,000 penalty the SEC has sought in similar cases.
An SEC spokesperson declined to comment on Musk’s filing.
The SEC requires shareholders to disclose within 10 calendar days when they reach 5% ownership, saying the rule protects investors who might otherwise be kept in the dark and sell their own stock.
In a court filing on Friday, the SEC said Musk’s intent didn’t matter, and he should be liable for violating “important public reporting requirements under the federal securities laws.”
Musk has long feuded with the SEC.
This included when the regulator sued him in 2018 after he said on Twitter he might take Tesla private and had secured funding.
He settled that lawsuit by paying a $20 million civil fine, agreeing to let Tesla lawyers review some Twitter posts in advance, and giving up his role as Tesla’s chairman.
The current SEC lawsuit was filed on January 14, six days before Republican President Donald Trump took office and made Musk an adviser to slash the federal workforce and spending.
Musk announced his departure from the Department of Government Efficiency in late May.
The case is SEC v Musk, U.S. District Court, District of Columbia, No. 25-00105.
Reporting by Chris Prentice and Jonathan Stempel in New York and Shubham Kalia in Bengaluru Editing by Himani Sarkar, Jamie Freed and Frances Kerry
Source: worldautoforum.com
