The SEC is suing Elon Musk for allegedly failing to timely disclose its Twitter acquisition

The Securities and Exchange Commission on Tuesday filed a securities violation lawsuit against Elon Musk over his acquisition of Twitter, now called X.

The SEC alleges that Musk violated federal securities law by failing to timely disclose his 5% stake in Twitter, according to a complaint filed in federal court in Washington. The SEC alleges that Musk waited to announce the purchase to gain a larger position in Twitter at a discounted price.

The lawsuit comes in Gary Gensler’s final week as SEC chairman, before he steps down on January 20. Gensler and Musk have clashed several times over the past four years, including last month. Musk scoffed at the SEC office’s proposed settlement at X. However, Musk could face a friendlier SEC commissioner in just a few weeks when Trump’s nominee takes office.

The SEC complaint states that Musk announced his acquisition of Twitter 11 days late. After Musk’s alleged purchase of more than 5% of Twitter on March 24, 2022, the SEC required him to file a beneficial ownership statement. He filed the report on April 4, 2022, according to the SEC’s complaint.

During this delayed disclosure period, Musk allegedly increased his position in Twitter from a 5% stake to a 9% stake. On the day Musk disclosed the purchase to the SEC, Twitter’s stock price rose 27% from the previous day’s closing price. The SEC alleges that this allowed Musk to pay less than $150 million for his stake in Twitter.

In its complaint, the SEC asked Musk to return ill-gotten gains and pay additional civil penalties. Ultimately, a federal court will decide whether the SEC’s allegations have merit and decide whether Musk should be fined.

Musk’s lawyer, Alex Spiro, called the complaint an “admission” that he could not bring a “real case” in a filing with the SEC. Bloomberg on tuesday.

“The SEC’s multi-year harassment campaign against Mr. Musk resulted in a series of complaints against Mr. Musk as the SEC stepped back and left office,” Spiro told Bloomberg.

In a post on X in December, Musk shared a letter from Spiro similar notes also refer to “track years” from the SEC. That letter rejected the SEC’s offer to settle the case.

President-elect Donald Trump to fill Gensler’s role Paul Atkins nominatedHe served as SEC commissioner during the Bush administration and is expected to be friendlier to Trump’s allies. Musk is as close to Trump as anyone these days, and X’s owner could face a different regulatory regime within weeks.