Elon Musk’s Attempt to Dismiss SEC Lawsuit Regarding Twitter Stake Fails

A federal judge on Tuesday rejected Elon Musk’s bid to dismiss a U.S. Securities and Exchange Commission (SEC) lawsuit, which alleges that he delayed disclosing his purchases of Twitter shares in 2022.

U.S. District Judge Sparkle Sooknanan, based in Washington, D.C., stated that none of Musk’s arguments justified a dismissal. This includes his assertion that the SEC was overreaching in an attempt to penalize him for his criticisms of the agency.

Lawyers representing Musk did not immediately respond to requests for comment, while an SEC spokesperson declined to provide any remarks.

The SEC initiated the lawsuit against Musk in January 2025, claiming that his 11-day delay in revealing his initial 5% stake in Twitter during late March and early April 2022 allowed him to acquire over $500 million in shares at artificially low prices.

The regulatory body is seeking to have Musk repay the $150 million he allegedly saved at the expense of unsuspecting investors, in addition to a civil fine.

Musk has characterized the delay as inadvertent. He further argued that the SEC’s actions represent “selective enforcement” of federal securities laws, aimed at targeting him for his criticisms of “government overreach,” which he claims is protected under the First Amendment of the U.S. Constitution. Musk also described the proposed $150 million fine as excessive, arguing that it violates the Eighth Amendment, especially when compared to the $100,000 penalties the SEC has pursued in similar cases.

JUDGE CITES CONGRESSIONAL INTENT TO PROTECT INVESTORS

The SEC mandates that shareholders disclose their ownership within 10 calendar days upon reaching a 5% stake to safeguard investors who might otherwise be unaware and potentially sell their shares.

In her 45-page ruling, Judge Sooknanan emphasized that this requirement reflects Congress’s intent to prevent investors from acquiring shares at lower prices while attempting to gain control of a company. “The court does not doubt that Mr. Musk would prefer to avoid having to disclose information that might raise stock prices while he makes a play for corporate control,” she wrote. “But the balance Congress struck … does not violate the First Amendment.”

Musk has had a long-standing contentious relationship with the SEC. In 2018, the agency sued him after he tweeted about potentially taking his electric car company, Tesla, private, claiming he had secured funding. He settled that case by paying a $20 million civil fine, agreeing to have Tesla lawyers review some of his tweets in advance, and stepping down as Tesla’s chairman.

In October 2022, Musk acquired Twitter for $44 billion and subsequently rebranded it as X. Recently, on Monday, Musk announced that his rocket and satellite company, SpaceX, has acquired his artificial intelligence venture, xAI, which includes assets from X. This merger has resulted in the creation of the world’s most valuable private company, valued at approximately $1.25 trillion.

Musk’s net worth stands at $851.6 billion, according to Forbes magazine, significantly surpassing the $277.5 billion fortune of Google co-founder Larry Page, who ranks second.

Topics
Lawsuits

A federal judge on Tuesday rejected Elon Musk’s bid to dismiss a U.S. Securities and Exchange Commission (SEC) lawsuit, which alleges that he delayed disclosing his purchases of Twitter shares in 2022.

U.S. District Judge Sparkle Sooknanan, based in Washington, D.C., stated that none of Musk’s arguments justified a dismissal. This includes his assertion that the SEC was overreaching in an attempt to penalize him for his criticisms of the agency.

Lawyers representing Musk did not immediately respond to requests for comment, while an SEC spokesperson declined to provide any remarks.

The SEC initiated the lawsuit against Musk in January 2025, claiming that his 11-day delay in revealing his initial 5% stake in Twitter during late March and early April 2022 allowed him to acquire over $500 million in shares at artificially low prices.

The regulatory body is seeking to have Musk repay the $150 million he allegedly saved at the expense of unsuspecting investors, in addition to a civil fine.

Musk has characterized the delay as inadvertent. He further argued that the SEC’s actions represent “selective enforcement” of federal securities laws, aimed at targeting him for his criticisms of “government overreach,” which he claims is protected under the First Amendment of the U.S. Constitution. Musk also described the proposed $150 million fine as excessive, arguing that it violates the Eighth Amendment, especially when compared to the $100,000 penalties the SEC has pursued in similar cases.

JUDGE CITES CONGRESSIONAL INTENT TO PROTECT INVESTORS

The SEC mandates that shareholders disclose their ownership within 10 calendar days upon reaching a 5% stake to safeguard investors who might otherwise be unaware and potentially sell their shares.

In her 45-page ruling, Judge Sooknanan emphasized that this requirement reflects Congress’s intent to prevent investors from acquiring shares at lower prices while attempting to gain control of a company. “The court does not doubt that Mr. Musk would prefer to avoid having to disclose information that might raise stock prices while he makes a play for corporate control,” she wrote. “But the balance Congress struck … does not violate the First Amendment.”

Musk has had a long-standing contentious relationship with the SEC. In 2018, the agency sued him after he tweeted about potentially taking his electric car company, Tesla, private, claiming he had secured funding. He settled that case by paying a $20 million civil fine, agreeing to have Tesla lawyers review some of his tweets in advance, and stepping down as Tesla’s chairman.

In October 2022, Musk acquired Twitter for $44 billion and subsequently rebranded it as X. Recently, on Monday, Musk announced that his rocket and satellite company, SpaceX, has acquired his artificial intelligence venture, xAI, which includes assets from X. This merger has resulted in the creation of the world’s most valuable private company, valued at approximately $1.25 trillion.

Musk’s net worth stands at $851.6 billion, according to Forbes magazine, significantly surpassing the $277.5 billion fortune of Google co-founder Larry Page, who ranks second.

Topics
Lawsuits