In a last-minute move before Republicans took control of the US Securities and Exchange Commission (SEC) in January, the agency’s commissioners held a decisive vote on whether to sue Tesla CEO Elon Musk over his delayed disclosure of stock purchases in Twitter, now X.
The ongoing investigation, which started in 2022, scrutinized Musk’s failure to report his acquisition of more than 5% of X’s shares within the legally required 10-day window. Musk, who ultimately completed his $44 billion purchase of the company, disclosed his stake only after 21 days. This delay allowed him to buy additional shares at a lower price, which, according to the SEC, saved him $150 million.
SEC Commissioners Split on Musk Lawsuit
Recent reports indicate that four of the five SEC commissioners voted to advance the lawsuit against Musk, including Republican Hester Peirce. The only dissenting vote came from Republican Mark Uyeda, soon to be the acting SEC chair. Uyeda expressed concerns regarding the political ramifications of the case, given Musk’s prominent support of US President Donald Trump, which has made him a contentious figure in political discussions.
Uyeda reportedly urged SEC enforcement staff to sign a pledge that asserted no political motivations were involved in the case, a request that the staff declined due to adherence to the SEC’s standard practices.
Despite these reservations, Peirce and the three Democratic commissioners proceeded with the vote, and the SEC officially filed the complaint on January 14, shortly before the leadership transitioned. The complaint focuses on Musk’s alleged violation of securities laws, which necessitate investors to disclose any stake exceeding 5% in a company within a 10-day period.
According to the SEC, Musk’s late disclosure provided him with an unfair advantage to acquire additional shares at a more favorable price, ultimately benefiting him financially at the expense of other investors. Musk has denied any wrongdoing, asserting that his delay stemmed from a misunderstanding of the SEC’s disclosure requirements. Nonetheless, investigators questioned whether his tardiness was intentional, complicating the case and resulting in further delays.
Musk’s reluctance to participate in additional interviews in 2022 also prolonged the investigation, compelling the SEC to seek a court order to enforce his testimony. Although Musk was eventually deposed in October 2024, the matter remained unresolved as the 2024 election loomed, casting a politically sensitive light on the SEC’s approach to the case.
Criticism Intensifies Over Musk’s Influence on DOGE
As the head of the Department of Government Efficiency, Elon Musk’s initiatives aimed at reducing federal staffing and budgets have attracted scrutiny and sparked the “Tesla Takedown” movement. Now in its fifth week, protests have proliferated to nearly 90 Tesla showrooms across the nation.
Participants are encouraging the public to “sell your Teslas” and “dump your stock” to hold Musk accountable for his actions, reflecting growing frustration towards his influence in both the automotive and financial sectors.
The controversy surrounding the SEC’s lawsuit against Musk raises important questions about the intersection of politics and regulatory oversight in the fast-evolving landscape of corporate governance.
