Elon Musk’s attempt to dismiss SEC’s Twitter stake lawsuit fails

A lawsuit filed against billionaire Elon Musk by the U.S. Securities and Exchange Commission (SEC) alleging that he failed to disclose his increasing interest in Twitter in a timely manner was not dismissed by a federal judge. The SEC claims that Musk’s delay in revealing his stake allowed him to purchase shares at lower prices, resulting in a substantial financial loss of over US$150 million for Twitter shareholders.

Elon Musk challenged the SEC’s lawsuit, arguing that it was an infringement on his free-speech rights and accusing the agency of selective enforcement. However, U.S. District Judge Sparkle Sooknanan rejected Musk’s arguments, stating that they were not sufficient grounds for dismissing the lawsuit, citing the importance of complying with disclosure laws.

The lawsuit, filed by the SEC in January 2025, alleged that Musk acquired Twitter shares in 2022 without promptly disclosing the extent of his holdings as required by law. Musk went on to acquire Twitter for US$44 billion, privatizing the company under the new name X. The SEC claimed that Musk’s failure to disclose his holdings in a timely manner allowed him to purchase shares at a lower price, resulting in significant financial losses for Twitter shareholders.

In response to Musk’s attempt to dismiss the lawsuit, his attorneys argued that it was a waste of the court’s time and taxpayer resources. The SEC countered by urging Judge Sooknanan to hold Musk accountable without the need for a trial, emphasizing that there was no dispute over his failure to meet the disclosure deadline. Judge Sooknanan emphasized that while Musk may have preferred to avoid disclosing information that could impact stock prices during his pursuit of corporate control, the law mandates transparency.

The case between the SEC and Musk remains ongoing, with implications for both parties. Musk’s actions regarding Twitter and the subsequent legal battle with the SEC highlight the importance of timely disclosure of securities holdings and the legal repercussions of failing to comply with such requirements. The outcome of this case will have far-reaching implications for both Musk and regulatory enforcement of securities laws.