As Biden administration deadline approaches, US Securities and Exchange Commission files lawsuit Elon Musk In federal court. The existing law 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 common shares in the company within 10 calendar days. If true, that delay would be a violation of federal security laws. “As a result, Musk was able to continue purchasing shares at artificially low prices,” the SEC said. the allegation is“He was allowed to underpay at least $150 million for shares purchased after the beneficial ownership report came out.” The SEC has asked for a jury trial.
This should all be very simple. “This looks like a straightforward case about a clear violation of a well-established SEC rule,” says James Park, a UCLA School of Law professor who focuses on securities regulation and corporate law. You either file your paperwork within 10 days or you don't; The SEC claims Musk did not do this. The agency alleges that he acquired enough shares to exceed that limit by March 14 that year, and did not publicly disclose his ownership until April 4. (The SEC alleges Musk was technically 11 days late, as he continued to acquire shares March 24)
And yet it took nearly three years for the SEC to bring the case. “The question is why are they doing it now,” says David Rosenfeld, former co-chief of the SEC's New York enforcement office and currently a professor at Northern Illinois University College of Law. “The only plausible answer is that they want to get it done before the administration changes.” Rosenfeld noted that he did not review the SEC complaint in depth.
That executive branch change, which comes in less than a week, creates a more favorable regulatory environment for Musk donated millions of dollars He served on political action committees supporting Donald Trump's presidential campaign and has reportedly been a close advisor to the President-elect during the transition period. Current SEC Chairman Gary Gensler will likely be replaced by Trump's nominee Paul Atkins, who is widely seen as supportive. light regulator touch,
Musk's attorney Alex Spiro says he believes the complaint is an isolated step. “As soon as the SEC stepped back and left office, the SEC's multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count Tic-Tac complaint against Mr. Musk,” he wrote in an email.
Although the filing occurred just before Trump's Jan. 20 inauguration, the investigation that led to the complaint has been years in the making. The agency had to send summons to Musk in May 2023 to take his testimony in the investigation. said Which Musk canceled two days before his scheduled testimony in September. a federal court justified a prior decision to compel him to testify in May 2024; SEC lawyers went out to interview him on September 10, but he made them stand Once again to attend a SpaceX launch.