Billionaire and owner of the social media platform X, Elon Musk, is being sued by the U.S. Securities and Exchange Commission (SEC) for $150 million on allegations that he lied to investors when he acquired a significant stake in Twitter in 2022. The allegations of Musk’s breach of federal securities laws through his improper disclosure of his stock acquisition are central to the suit, which has drawn political interest.

Regulatory Violations and Allegations

The Economic Times reported that The SEC commissioners voted 4-1 in favor of the lawsuit, which was filed on January 14, 2025; the single vote against it came from temporary SEC Chief Mark Uyeda. According to reports, Uyeda voiced reservations regarding the lawsuit’s timing and possible political reasons. Musk was served the SEC notice at SpaceX’s Starbase facility in Texas earlier this month. However, the process server was reportedly forced to leave the documents outside the building after the facility’s security personnel originally refused to take them.

According to abcNEWS, the SEC alleges that Musk, who acquired a 9% stake in Twitter (now X) in January of last year, failed to disclose the purchase within the federal 10-day reporting deadline.Under federal securities law, investors must publicly disclose when they acquire more than 5% of a company’s shares within ten days. The SEC argues that Musk waited too long to report his stake in Twitter, giving him an unfair financial advantage. Musk disclosed his interests on April 4, 2022, some weeks after he had passed the 5% threshold. 

According to the lawsuit, Musk submitted his ownership disclosure after the deadline, which resulted in a 27% increase in Twitter’s stock price.

He allegedly saved at least $150 million by purchasing shares at overinflated prices due to the delay. 

The lawsuit, originally filed in January 2025, reflects the continued scrutiny of Musk’s financial dealings, particularly following his subsequent purchase of Twitter for $44 billion later that year. The lawyers of Musk have agreed to file a response to the lawsuit by June 6, 2025. The lawsuit delineated that,

“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose.” The lawsuit has also urged the court to ask Musk to pay a civil penalty and “pay disgorgement of his unjust enrichment”.

Musk’s Response and Possible Legal Battle

Alex Spiro, Musk’s attorney has refuted and dismissed the case and has not done anything wrong and the case brought against him by SEC is “sham”. Taking to hsi X account in January, when the case was filed, Musk posted: “They spend their time on s— like this when there are so many actual crimes that go unpunished.” In another post on X, Musk jokingly said: “Oh Gary, how could you do this to me?”

The SEC had offered to settle the case for $178 million, a $40 million penalty and $45 million in interest. Spiro, in his letter to the SEC has termed this demand as “exorbitant and unprecedented”. According to the letter, Musk was given 48 hours to agree to the financial settlement or risk being charged with several offenses. Spiro emphasized in the letter that they reserved their legal rights and that neither he nor Musk will be frightened by the SEC.

Apart from this Spiro has further accused the agency of harassing Musk continuously with recent subpoena requests for his attorney’s testimony. He further stated that,

“This series of events makes clear that the Commission is not motivated to seek the truth but instead is engaged in an improperly motivated campaign against Mr. Musk and the individuals and companies associated with him.”

As per legal analysts, even though such cases often result in settlements, Musk’s history of defying the authorities could lead to a long-drawn court fight.  If found guilty, he could be forced to pay additional fines and return the $150 million in alleged gains.