Elon Musk is facing potential penalties from the Securities and Exchange Commission (SEC) regarding his purchases of Twitter stock before acquiring the social media platform in 2022. Musk's lawyer has criticized the SEC's demand for a monetary payment as a 'misguided scheme' in a letter to the outgoing SEC chairman. The letter also mentions the reopening of an investigation into Neuralink, Musk's brain interface company.
The SEC has not officially commented on the matter, citing its policy of conducting investigations confidentially to maintain integrity. Musk's lawyer responded to SEC staff inquiries about purchases, sales, and disclosures of Twitter shares, seeking clarification on the direction of these actions.
In October 2022, Musk bought Twitter for $44 billion. A lawsuit filed by a Twitter investor in April 2022 alleged that Musk failed to disclose his stake of at least 5% in a timely manner, causing harm to ordinary investors who sold shares before the disclosure. The delayed revelation of Musk's stake led to a 27% increase in Twitter's share value.
This is not the first time Musk has clashed with the SEC. In 2018, he and Tesla paid fines over tweets about taking Tesla private. Musk contested a settlement provision requiring his Tesla-related posts to be reviewed, arguing it infringed on his free speech rights. The Supreme Court rejected Musk's appeal.
SEC Chairman Gensler, appointed by President Biden, announced his resignation effective January 20, coinciding with Donald Trump's inauguration. Trump plans to nominate cryptocurrency advocate Paul Atkins as Gensler's successor. Musk has been named co-chair of a 'Department of Government Efficiency' by Trump to aid in federal government reform.
