A U.S. federal judge has rejected Elon Musk’s attempt to dismiss a lawsuit filed by the Securities and Exchange Commission (SEC) accusing him of failing to properly disclose his stake in Twitter, now known as X, before acquiring the company in 2022.
The ruling allows the SEC’s case to move forward, dealing a setback to Musk, who had argued that the regulator’s enforcement action was unconstitutional and represented an abuse of authority. The lawsuit centers on Musk’s alleged failure to file a required disclosure after crossing the 5% ownership threshold in Twitter shares, a key requirement under U.S. securities law.
According to the SEC, Musk began purchasing Twitter stock in early 2022 and exceeded the 5% ownership mark but did not file the mandatory disclosure within the stipulated 10-day period. The regulator claims this delay allowed Musk to continue buying shares at lower prices, potentially saving him more than $150 million while other investors remained unaware of his growing stake.
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Musk sought dismissal of the case by arguing that the SEC’s action violated his constitutional rights and that the disclosure rules were being applied unfairly. However, the judge found that the SEC had sufficiently stated its claims at this stage and that Musk’s arguments were not grounds for dismissing the lawsuit before it proceeds to further litigation.
The SEC filed the lawsuit in 2025 as part of its broader enforcement mandate to ensure transparency in financial markets. Beneficial ownership disclosures are designed to alert investors when a single shareholder accumulates significant influence in a publicly traded company, potentially affecting share prices and corporate governance.
With the motion to dismiss denied, the case is expected to advance into discovery and subsequent legal proceedings. While the ruling does not determine Musk’s liability, it keeps the SEC’s claims alive and sets the stage for a closer examination of the circumstances surrounding Musk’s Twitter share purchases.
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