On Thursday, August 28, Elon Musk filed a motion to dismiss the U.S. Securities and Exchange Commission (SEC) lawsuit accusing him of failing to disclose his multibillion-dollar stake in Twitter (now X) back in 2022.
The SEC, which filed its case in Washington, D.C., federal court in January, claimed Musk violated securities law by missing the deadline by 11 days.
Allegedly, the hesitance allowed the richest man in the world to amass more than $500 million in additional shares at favorable prices and ensure a 9.2% stake before going public on April 4, 2022.
The legal issues unsurprisingly affected Musk’s business ventures, in particular Tesla (NASDAQ: TSLA), whose shares slipped 1.04% following the news and sat at $342.65 in pre-market at the time of writing, August 29, down an additional 0.96%.
The automaker was already in hot water before the motion, reporting a disappointing 40% drop in European sales and losing ground to its Chinese competitor BYD (HKEX: 1211). Since the stock managed to stay positive despite the loss, it appears the CEO’s fresh controversy was the necessary push to turn it red.
Musk v. SEC
A notoriously controversial figure, the Tesla CEO has clashed with the SEC before, most notably in 2018 over his tweets about taking Tesla private.
The ongoing dispute, Musk’s legal team argued, is political, targeting the X owner for his outspoken criticism of the government.
“The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly,” Musk’s lawyers further added, as reported by Bloomberg.
If the court does not agree to dismiss the lawsuit, the entrepreneur could face severe financial penalties and be forced to return the profits he generated thanks to the delayed disclosure.
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