Elon Musk Seeks Dismissal of SEC Lawsuit for Delay in Twitter Stake Disclosure

Elon Musk is seeking dismissal of an SEC lawsuit in which the U.S. regulator accused him of exceeding the required time to reveal his 5% stake in Twitter. Musk acquired Twitter in October 2022 for about $44 billion and later rebranded it as X. According to Reuters, the SEC filed a complaint against Musk in a federal court in Washington D.C.

The SEC Accuses Musk of Violation

The U.S. SEC filed the lawsuit against Musk on Tuesday, January 15, 2025. According to SEC’s beneficial ownership rules, investors must disclose stakes that exceed 5% ownership within 10 calendar days. In Musk’s case, the disclosure should have been done by March 24, 2022.

The SEC claimed that Musk violated the federal securities law for waiting 11 days after the legal deadline to disclose his 5% stake in Twitter in the form of common stock. In the lawsuit, the SEC also alleged that Musk’s delay in disclosing his stake in Twitter may “impact the transparency of markets and investors’ confidence.”

The SEC lawsuit against Musk sparked debate over compliance and fairness in the financial markets.

According to the SEC, Musk secretly amassed additional Twitter stock at artificially low prices during the extended period before disclosing his stock purchase. The SEC alleged that the delayed disclosure allowed Musk to profit at the cost of other investors who sold their shares in that period, unaware of his growing stake.

“At the expense of unsuspecting investors, Musk instead bought more than $500 million of Twitter shares at artificially low prices before finally revealing his purchases on April 4, 2022, by which time he owned a 9.2% stake. Twitter’s share price rose more than 27% following that disclosure,” The SEC lawsuit read in part.

Through the January lawsuit, the SEC sought to compel Musk to pay a civil fine and cede profits that the U.S. regulator claimed resulted from the violation.

An Innocent Filing Error

In a motion filed on August 28, 2025, a legal team seeks to defend Musk’s late filing of the Twitter 5% stake. The lawyer claimed that the Tesla owner meant no harm. They presented Musk’s actions as those of an innocent investor who made a filing error and immediately corrected it.

According to the lawyers, the Twitter-owner stopped buying additional shares of the listed social media giant and filed his disclosure one business day after his wealth manager consulted securities disclosure lawyers about filing requirements.

The SEC filed the lawsuit six days before the U.S. President Donald Trump took office and enlisted Musk as a special advisor on federal spending. Musk lawyers claim that SEC’s lawsuit against Musk “reveals an agency targeting an individual for his protected criticism of government overreach.”

“The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly. Rather, the SEC alleges that Mr. Musk late-filed a single beneficial ownership form three years ago, and fully corrected any alleged error immediately upon its discovery. There is no ongoing violation,” the lawyers said.

Longstanding Feud with the SEC

Musk’s feud with the SEC did not start with his Twitter acquisition. In 2018, the regulator sued him after he posted about the possibility of taking Tesla private and his claim that he had secured funding to do so.

Elon Musk’s motion to dismiss SEC’s lawsuit comes just two months after he launched XChat, a calling support feature that is built into X. The new encrypted messaging feature offers private messaging, audio and video calling, vanishing messages, and file sharing. With XChat, X now competes directly with messaging platforms like WhatsApp, Telegram, and Apple iMessage.