Musk Accused by SEC of Cheating Twitter Holders Out of Millions

Elon Musk cheated Twitter shareholders out of more than $150 million by waiting too long to disclose his growing stake in the company as he prepared a takeover bid, the US Securities and Exchange Commission claimed in a lawsuit filed days before the Trump administration takes over.

The agency’s complaint, which was immediately disputed by a lawyer for Musk, accuses the billionaire of failing to promptly report that he had amassed more than 5% of the social-media platform’s stock in early 2022 — a revelation that would have sent the stock’s price up.

“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices,” the regulator said in its civil suit filed in federal court in Washington, DC. “Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm.”

Alex Spiro, a lawyer for Musk, said the action is “an admission” that the SEC cannot bring an “actual case,” because Musk “has done nothing wrong and everyone sees this sham for what it is.”

“The SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty,” Spiro said in a statement.

Trump Supporter

Musk, the world’s richest person, has become one of Donald Trump’s biggest supporters and closest advisers in recent months. The president-elect has tasked Musk, along with Vivek Ramaswamy, with a broad government cost-cutting initiative. Musk has also joined the president-elect in conversations with foreign officials.

Elon Musk, left, with Vivek Ramaswamy on Capitol Hill in Washington, DC on Dec. 5.

Photographer: Al Drago/Bloomberg

It’s unclear what Musk’s ties to Trump and a change in leadership at the SEC will mean for the case. Trump has tapped Paul Atkins, a former SEC commissioner and critic of onerous penalties, to helm the agency.

The regulator has been probing Musk’s investment in Twitter since 2022, pressing him to explain why he hadn’t disclosed his stake within the correct timeline.

SEC attorneys in December asked Musk to pay more than $200 million to settle the allegations that he failed to properly disclose his Twitter investment, according to a letter by his lawyers sent to the agency last month and reviewed by Bloomberg News.

In the letter, Spiro said the SEC is seeking the relief but isn’t accusing Musk of acting willfully or with the intent to mislead investors.

The SEC declined to comment.

‘Improper and Punitive’

Spiro called the SEC’s proposed penalty “inherently improper and punitive.” Spiro said in cases of similar violations by other individuals, the agency has sought a “reasonable” penalty of typically $100,000 or less.

Alex Spiro

Photographer: Marlena Sloss/Bloomberg

Musk in December had publicly previewed that regulators were investigating him, posting a letter by Spiro on X that said the agency had “reopened” a probe into his brain-computer interface company, Neuralink Corp.

The letter also said the agency was getting ready to take action against him over his investment in Twitter. It said SEC staff the day before had issued a “settlement demand that required Mr. Musk within 48 hours to either accept a monetary payment or face charges on numerous accounts.”

Musk has had a strained relationship with the SEC, which sued him for securities fraud in 2018 after he tweeted that he had “funding secured” to take electric carmaker Tesla Inc. private, leading to a surge in the company’s shares. Musk agreed to a settlement in the case, with the billionaire and Tesla each paying a $20 million penalty and Musk stepping down as the company’s chairman.

‘Twitter Sitter’

The Supreme Court later rejected an appeal from Musk in his “Twitter sitter” case, leaving in place a deal to have an in-house attorney pre-approve social media posts about Tesla.

By March 2022, Musk had acquired beneficial ownership of more than 9% of Twitter’s outstanding common stock. This triggered reporting requirements due within 10 days of the purchase. Musk filed the report 11 days later, making the company’s stock price surge by 27% from the day before, according to the lawsuit.

The complaint alleges that Musk repeatedly ignored advice to disclose his stake, after he passed the 5% threshold.

The SEC asked the court to direct Musk to pay a civil penalty and return profits, which the agency claims he reaped unjustly from his stock purchases.

Musk also faces investor litigation accusing him of hiding his acquisition of Twitter shares.

The case is Securities and Exchange Commission v. Musk, 25-cv-00105, US District Court, District of Columbia (Washington).

(Updates with context on pending changes in SEC leadership in seventh paragraph)

--With assistance from Malathi Nayak.

To contact the reporters on this story:
Nicola M. White in Washington at nicwhite@bloomberg.net;
Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story:
Michael J. Moore at mmoore55@bloomberg.net;
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Peter Blumberg, Janet Paskin

© 2025 Bloomberg L.P. All rights reserved. Used with permission.