Elon Musk, CEO of Tesla and owner of X (formerly Twitter), is facing potential charges from the Securities and Exchange Commission (SEC) related to his disclosure of Twitter stock purchases before acquiring the platform in 2022. A letter penned by Musk’s lawyer, Alex Spiro, and publicly posted on X, alleges the SEC is seeking a monetary penalty and has reopened an investigation into Musk’s neurotechnology company, Neuralink.
Spiro’s letter characterizes the SEC’s pursuit of a financial penalty as a “misguided scheme” and asserts that Musk will not be intimidated. The letter also questions who within the SEC authorized the renewed scrutiny of Neuralink. The SEC declined to comment on the letter or confirm the existence of any demands made to Musk, citing its policy of conducting investigations confidentially.
The SEC investigation centers around Musk’s purchase and disclosure of Twitter shares leading up to his $44 billion acquisition of the company in October 2022. This follows an April 2022 lawsuit filed by a Twitter investor accusing Musk of failing to disclose his accumulation of a 5% stake in the company within the required regulatory timeframe. The lawsuit alleges Musk waited until his ownership neared 9% before revealing his position.
This alleged delay, the suit claims, harmed investors who sold their Twitter shares in the two weeks preceding Musk’s disclosure, preventing them from capitalizing on the subsequent 27% surge in share price. Musk’s disclosure propelled Twitter’s stock from its April 1 close to nearly $50 by April 4.
This isn’t Musk’s first clash with the SEC. In 2018, he and Tesla each paid $20 million in fines over Musk’s tweets regarding securing funding to take Tesla private—a move that ultimately did not materialize. Musk later challenged a provision of that settlement requiring pre-approval of his Tesla-related tweets by a company attorney, arguing it infringed on his free speech rights. The Supreme Court ultimately rejected Musk’s appeal without comment.
The SEC’s actions coincide with the impending departure of Chair Gary Gensler, a Biden appointee, scheduled for January 20. President-elect Donald Trump has announced his intention to nominate cryptocurrency advocate Paul Atkins to lead the SEC. Trump has also tapped Musk to co-chair a “Department of Government Efficiency” focused on federal government reform. These developments add another layer of complexity to the ongoing scrutiny of Musk’s financial dealings.
