Elon Musk is asking a federal judge to throw out a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) over his 2022 purchase of Twitter shares.
The regulator accuses Musk of failing to meet a legal deadline to disclose that he had acquired over 5% of Twitter’s stock before launching his $44 billion takeover of the company, now rebranded as X. The SEC argues that the delay gave him an unfair advantage, allowing him to buy additional shares at lower prices before his stake became publicly disclosed.
Musk challenges SEC’s claims
Musk has taken an aggressive stance in his latest filing, challenging the SEC’s lawsuit. His legal team told the court that the case should never have been brought, asserting that the SEC failed to demonstrate that the Billionaire violated securities laws in a way that harmed investors.
They stressed that the delay in disclosure was not an attempt to mislead the market. According to his lawyers, Musk stopped buying Twitter stock upon realizing he had crossed the reporting threshold and promptly filed the required disclosure form the following business day after seeking legal guidance.
The Billionaire’s lawyers said in the filing that the SEC had not claimed, and could not claim, that he acted with intent to defraud or mislead, let alone that he succeeded. They added that the entire case wastes the court’s time and taxpayer resources.
The lawyers also noted that the regulator was unfairly targeting Musk. They accuse the SEC of having pursued him with an unusual level of intensity for years, and suggest the SEC has engaged in a “campaign of harassment.” This isn’t the first time Musk has levelled these accusations; in previous disputes, he accused the agency of using him as a political football.
Musk’s attorneys also seek a change of venue. They want the case moved out of Washington, D.C., where the SEC is based, to a federal court in western Texas, where X Corp. now has its headquarters, following Musk’s decision to move the company. They claim that maintaining the case in Washington allows the SEC to have an unfair home-court advantage and compels the executive to wage war in its backyard.
The lawyers argued that the SEC’s location should not determine the case’s outcome. They said that forcing him to litigate in Washington would intensify the damage from what they described as the SEC’s years-long crusade against him and would ultimately harm shareholders.
SEC suspects Musk of profiting at shareholders’ expense
The SEC draws an entirely different picture. According to the agency, Musk hit this 5% ownership threshold in March 2022, but waited 11 days to disclose it. During that period, the SEC claimed that Musk had spent over $500 million to purchase Twitter shares at artificially low prices. When he disclosed his 9.2% stake on April 4, 2022, the stock rallied 27%.
The regulator estimates that shareholders who sold before disclosure lost more than $150 million that they might otherwise have made. The lawsuit seeks to force Musk to pay a civil penalty and to block him from profiting from trades made during that period. According to the agency, the delayed disclosure violated securities law and was intended to protect Main Street investors from being disadvantaged in the market.
This isn’t Musk’s first clash with the SEC. The regulator sued him in 2018 for a tweet saying he had “funding secured” to take Tesla private. That case was resolved with a settlement in which the billionaire resigned as chairman of Tesla and had some of his tweets preapproved.
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Source: https://www.cryptopolitan.com/elon-musk-moves-to-dismiss-sec-lawsuit/