US securities regulators sued Elon Musk in federal court in Washington on Tuesday in an enforcement action arising from his $44 billion purchase of Twitter, now called X.
The lawsuit against Musk, who has become a close adviser to President-elect Donald J. Trump, is likely to be one of the more contentious final acts of the Securities and Exchange Commission under Gary Gensler, its departing chair. It could also be undercut in just a few days, when Trump appoints new leadership to take charge of the regulator.
The S.E.C. contends that in buying Twitter in 2022, Musk violated securities laws by amassing a large stock position in the social media company without filing the proper notification. The complaint said he had waited 11 days before filing the required disclosure with the S.E.C.
The regulatory filings are required so investors in the marketplace can monitor the moves of large investors and potential takeover bids.
Because Musk did not disclose his position, he was able to continue buying Twitter stock at an artificially low price, the S.E.C. said in its lawsuit. The move “allowed him to underpay by at least $150 million” for the additional shares before he belatedly disclosed his stake, the lawsuit continued.