The US Securities and Exchange Commission has filed a lawsuit against Elon Musk in federal court, citing his failure to notify the agency of his acquisition of Twitter stock in early 2022 as a clear violation of federal security laws. The complaint claims that Musk failed to report his ownership threshold within 10 calendar days, allowing him to purchase shares at artificially low prices and potentially underpaying by at least $150 million.
The timing of the complaint is seen as unusual, with some experts suggesting it may be a “parting shot” from the departing administration. The SEC’s complaint centers on Musk’s acquisition of more than 5% of common Twitter shares within that timeframe. However, the agency has acknowledged that the case was years in the making, with multiple attempts to secure Musk’s testimony.
As the Biden administration nears its end, some experts point out that the investigation into this matter may be politically motivated. The incoming Trump administration is likely to bring changes to the SEC, potentially creating a more favorable environment for Musk. Musk has donated millions of dollars to Trump’s presidential campaign and has been reported to be a close adviser to the president-elect during the transition period.
Under normal circumstances, most SEC cases are settled. However, given Musk’s reluctance to do so in the past, this high-profile case may turn out to be against his most important benefactor under the new administration. The SEC chair is expected to change soon, with Trump’s nominee Paul Atkins widely viewed as supporting a lighter regulatory touch.
“The question is, why are they doing it now,” says former cohead of the SEC’s New York enforcement office David Rosenfeld. “The only plausible answer is they want to get it done before the administration changes.”
Source: https://www.wired.com/story/sec-suing-elon-musk-gensler-trump-timing