Musk seeks SEC lawsuit dismissal over Twitter stake disclosure
Tech billionaire Elon Musk is seeking to dismiss a Securities and Exchange Commission (SEC) lawsuit claiming he waited too long to disclose his growing share in Twitter, the social platform now called X.
“The SEC’s allegations, even accepted as true, make clear that Mr. Musk allegedly late-filed a single beneficial ownership form by a matter of days in 2022. The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly. The SEC does not allege that Mr. Musk caused any investor harm,” Musk’s lawyers said in a Thursday 60-page filing.
“Rather, the SEC alleges that Mr. Musk 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. There is no intent. There is no harm. Simply put, this action is a waste of this Court’s time and taxpayer resources,” the attorneys added.
The SEC sued Musk in January, alleging the SpaceX and Tesla executive delayed disclosure of his stake in Twitter before purchasing the platform in 2022, costing shareholders hundreds of millions of dollars. The lawsuit was filed days before President Trump was inaugurated on Jan. 20.
Investors are required to disclose when they own more than 5 percent of a company. Musk didn’t disclose any Twitter shares until April 4, 2022. At the time, he owned more than 9 percent of the shares, according to the SEC complaint.
The SEC has initiated a probe into Musk regarding his purchase of Twitter stock.
“The SEC’s demand for injunctive relief against future violations fails every element required for such relief, serving no legitimate purpose. The SEC’s pursuit of disgorgement of theoretical ‘savings’—in an action lacking any allegations of pecuniary harm to investors, causation, or scienter—violates centuries of equity jurisprudence limiting disgorgement, as well as the Supreme Court’s recent decision in Liu,” Musk’s lawyers said Thursday. “The SEC’s remedial theories find no support in law, equity, or the SEC’s own enforcement history.”
Musk purchased Twitter in October 2022 for $44 billion.
The SEC and Musk have gone at it before, with the regulator suing the billionaire entrepreneur in 2018 after saying on social media that he could take Tesla private.
The suit was settled with Musk and Tesla each paying $20 million civil penalty and for him to give up his post as Tesla chair for three years.