A federal judge rejected Elon Musk's motion to dismiss Securities and Exchange Commission allegations that he delayed reporting his Twitter stock purchases in 2022. The ruling issued Tuesday by U.S. District Judge Sparkle Sooknanan in Washington, D.C. allows the regulatory agency's lawsuit to proceed.
The SEC filed its complaint in January 2025, alleging Musk crossed the 5% ownership threshold in Twitter during March 2022 but waited 11 days beyond the regulatory deadline to disclose his position. During that period, according to the agency, Musk purchased more than $500 million in additional Twitter shares at prices described as artificially depressed.
Federal securities regulations require investors to report crossing the 5% ownership threshold within 10 calendar days. The disclosure rule aims to prevent investors from accumulating positions without market awareness, particularly when pursuing corporate control.
Musk's eventual filing revealed he held more than 9% of Twitter's outstanding common stock.
The commission seeks repayment of approximately $150 million that Musk allegedly saved through delayed disclosure, plus additional civil penalties, contending his failure to file timely reports allowed him to acquire shares from investors unaware of his accumulating position.
Musk argued the delay was inadvertent and characterized the enforcement action as "selective enforcement" targeting him for his public criticism of the agency. He also claimed the case violated his First Amendment rights and that the $150 million penalty would constitute an excessive fine under the Eighth Amendment.
Judge Sooknanan addressed these arguments in a 45-page decision, noting that
"the court does not doubt that Mr. Musk would prefer to avoid having to disclose information that might raise stock prices while he makes a play for corporate control."
However, she concluded that
"the balance Congress struck...does not violate the First Amendment."
The ruling represents another chapter in Musk's contentious history with the SEC. In 2018, the agency sued Musk over his tweet about potentially taking Tesla private at $420 per share with "funding secured." That case settled with Musk paying a $20 million civil fine, temporarily relinquishing his Tesla chairman role, and agreeing to have certain social media posts reviewed by company lawyers.
Musk completed his acquisition of Twitter for $44 billion in October 2022, subsequently renaming the platform X. The lawsuit focuses specifically on his stock accumulation during the months preceding that acquisition.
Legal representatives for Musk did not immediately respond to requests for comment following Tuesday's ruling. An SEC spokesperson declined to comment on the ongoing litigation.
The case, formally titled Securities and Exchange Commission v. Musk, will proceed in the U.S. District Court for the District of Columbia under docket number 25-cv-00105.
