With the clock running out on the Biden administration, the US Securities and Exchange Commission has sued Elon Musk In federal court. The law at hand is relatively straightforward. The timing of the complaint is more complicated.
The SEC’s complaint focuses on Musk’s acquisition of Twitter stock in early 2022. According to the complaint, Musk failed to notify the agency that he had acquired more than 5 percent of the common shares in the company within 10 calendar days. If true, that delay would violate federal security laws. “As a result, Musk was able to continue buying shares at artificially low prices,” SEC blame“Allows him to pay at least $150 million less for the shares he purchased after reporting his beneficial ownership.” The SEC has asked for a jury trial.
It should all be quite simple. “This seems like a straightforward case about a clear violation of a well-established SEC rule,” says James Park, a professor at the UCLA School of Law who focuses on securities regulations and corporate law. You either file your paperwork within 10 days or you don’t; The SEC claims that Musk did not. He acquired enough shares to exceed that limit by March 14 of that year, the agency alleges, and did not publicly disclose his ownership until April 4. March 24)
And yet it took almost three years for the SEC to bring the case. “The question is why are they doing it now,” says David Rosenfeld, former cohead of the SEC’s New York enforcement office and currently a professor at Northern Illinois University College of Law. “The only correct answer is that they want to get it done before the administration changes.” Rosenfeld notes that he did not thoroughly review the SEC complaint.
That executive branch change, which takes place in less than a week, creates a more favorable regulatory environment for Musk, who Donated hundreds of millions of dollars Has been a close advisor to the President-elect during the transition period and for political action committees supporting Donald Trump’s presidential campaign. Current SEC Chair Gary Gensler will likely be replaced by Trump’s nominee, Paul Atkins, who is widely seen as an endorsement. Light regulatory touch.
Musk’s lawyer, Alex Spiro, says he believes the complaint is an isolated shot. “As the SEC retreats and leaves office, the SEC’s multi-year campaign of harassment against Mr. Musk culminates in the filing of a single-count ticky-tack complaint against Mr. Musk,” he wrote in an email.
While the filing came just before Trump’s Jan. 20 inauguration, the investigation that led to the complaint has been ongoing for several years. The agency had to appear before Musk in May 2023 to take his testimony in the investigation has said that Musk canceled them two days before his scheduled testimony that September. A federal court retained an earlier decision to compel him to testify in May 2024; SEC lawyers flew to interview him on September 10, but he They stood up Once again to attend a SpaceX launch.
