Elon Musk has asked a judge to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) alleging that he did not disclose his initial investment in Twitter accurately.
Regulators contend the billionaire waited too long to disclose the extent of his stake in the social media firm before he ended up buying it outright and renaming it X.
The SEC initially brought its complaint in January, alleging Musk broke federal securities regulations by failing to disclose his Twitter holdings when they exceeded 5%. Under the agency’s rules, Musk ought to have disclosed his holdings by March 14, 2022, but held off until April 4 – over three weeks behind schedule. The delay, the SEC alleges, enabled Musk to purchase extra shares at artificially low costs, saving him an estimated $150 million.
In Thursday court papers, Musk’s lawyers firmly denied the accusations and referred to the suit as “a waste of this Court’s time and taxpayer resources.” Musk’s lawyers contended that the CEO of Tesla and SpaceX fixed the filing immediately after he noticed the error and maintained there was no attempt to defraud investors.
“The SEC doesn’t accuse Mr. Musk of causing any harm to investors,” his attorneys said. “There is no ongoing violation. There is no intent. There is no harm.”
The filing also charged the SEC with selectively targeting Musk because of his vocal criticism of the agency. The Commission is requesting financial penalties “more than 1,500 times greater” than what others are charged in comparable cases, the legal team said, characterizing the action as selective enforcement.
Musk and the SEC have had a long, combative relationship. During the last seven years, the regulator has initiated several investigations into his public comments and business activities. In one high-profile instance, Musk was accused of making a 2018 tweet that indicated he had lined up funding to privatize Tesla. Although the SEC sued him for the tweet, a jury later acquitted him of any wrongdoing.
When the SEC revealed this new suit in January, Musk derided the agency on Twitter as a “totally broken organization” that was squandering public resources. His lawyers reaffirmed that characterization in their request to dismiss, charging regulators with perpetrating a “relentless pursuit” of him.
The SEC would not comment on the fresh filing. The decision for now will lie in the hands of the court, whether to proceed with the case or dismiss it altogether.
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