DETROIT — Elon Musk has indicated that the Securities and Exchange Commission (SEC) is requesting that he either pay a financial penalty or confront legal action regarding his disclosures—or lack thereof—related to his acquisition of Twitter stock prior to purchasing the platform in 2022.
In a letter shared by Musk on the platform now known as X, his attorney, Alex Spiro, addressed the former SEC chairman, Gary Gensler. In the correspondence, Spiro claimed that the commission’s request for a monetary sum is a “misguided scheme” that will not deter Musk. Additionally, the letter mentions that the SEC has reopened its investigation into Neuralink, the company founded by Musk specializing in brain-computer interfaces.
The SEC has yet to release the letter publicly and has refrained from making any comments or confirming whether they have indeed made such a request to Musk.
“SEC policy dictates that investigations be conducted confidentially to maintain the integrity of the investigative process,” an SEC spokesperson stated in an email last week.
Spiro’s letter indicates that he is addressing inquiries from SEC personnel about a prolonged investigation into “specific purchases, sales, and disclosures of Twitter shares.” Furthermore, he is seeking clarification on who authorized these actions within the commission.
Musk completed his acquisition of Twitter for $44 billion in October 2022. However, a lawsuit filed in April 2022 by a Twitter investor accused Musk of neglecting to meet a regulatory deadline for revealing that he had accumulated at least a 5% stake. Instead, the lawsuit contends that Musk failed to disclose his holdings until he had increased his stake to over 9%.
This alleged delay, according to the lawsuit, negatively impacted everyday investors who sold their shares in the company during the approximately two weeks before Musk disclosed that he had a significant interest in Twitter. Once Musk revealed his stake, Twitter’s stock price surged by 27% from its close on April 1 to almost $50 by April 4. The lawsuit argues that the delay deprived earlier investors of the chance to benefit from considerable gains.
Musk’s contentious relationship with the SEC dates back to 2018 when he and his electric vehicle company, Tesla, agreed to pay $20 million each in fines due to Musk’s tweets about securing funding to take Tesla private—a venture that never materialized. Tesla remains publicly traded.
Musk has also sought to overturn aspects of the settlement that mandated his public communications regarding Tesla receive prior review by a company attorney, claiming that this infringed upon his free speech rights. This issue was elevated to the Supreme Court, which ultimately rejected Musk’s appeal without commentary.
Gensler, appointed to lead the SEC by President Joe Biden, announced last month that he would resign on January 20, coinciding with Donald Trump’s inauguration as president. Trump has signaled his intention to nominate Paul Atkins, a proponent of cryptocurrency, as the next SEC chair.
Along with this, Trump has appointed Musk to co-chair a new initiative aimed at reforming federal bureaucracy titled the “Department of Government Efficiency.”