Musk seeks to dismiss SEC suit over Twitter stake disclosure

Musk seeks to dismiss SEC suit over Twitter stake disclosure

Billionaire Elon Musk has filed a motion seeking to dismiss a civil lawsuit brought by the U.S. Securities and Exchange Commission (SEC) over his delayed disclosure of a significant stake in Twitter, later renamed X. The SEC accused Musk of violating federal securities law by waiting 11 days beyond the required 10-day window to disclose his initial purchase of 5% of Twitter’s common shares. The delay allegedly allowed Musk to buy more shares at "artificially low" prices before the information became public [1].

According to the SEC, Musk purchased more than $500 million of Twitter shares before finally revealing his stake on 4 April, 2022, by which time he held a 9.2% share. SEC rules require investors to disclose within 10 calendar days when crossing a 5% ownership threshold. Musk’s lawyers argued that he halted further purchases and filed the disclosure one business day after his wealth manager consulted securities counsel. They also claimed that the SEC was unfairly targeting Musk for his protected criticism of government overreach [1].

The lawsuit was filed on 14 January, six days before Republican President Donald Trump took office and appointed Musk as a special adviser on federal workforce and spending reductions. Musk faces a court deadline to respond by Friday (29 August). Musk has previously clashed with the SEC, including a 2018 case over his tweets suggesting he might take Tesla private and had secured funding [1].

Musk’s lawyers claimed that the SEC does not allege any intentional, deliberate, willful, or reckless actions by Musk. Rather, they argue that he late-filed a single beneficial ownership form three years ago and fully corrected any alleged error immediately upon its discovery. There is no ongoing violation [1].

The SEC did not immediately respond to requests for comment outside business hours. Musk has previously clashed with the SEC, including a 2018 case over his tweets suggesting he might take Tesla private and had secured funding [1].

References:
[1] https://anewz.tv/science/innovations-technology/12503/elon-musk-moves-to-dismiss-sec-case-on-delayed-twitter-stake/news
[2] https://finance.yahoo.com/news/elon-musk-seeks-dismissal-sec-121701709.html