Elon Musk revealed via a social media post on Thursday that the U.S. Securities and Exchange Commission (SEC) has issued a “settlement demand” related to its ongoing investigation into his purchase, sale, and disclosures of Twitter shares in 2022.
Musk’s post included a letter from his attorney, Alex Spiro, addressed to SEC Chair Gary Gensler. The letter claimed the SEC pressured Musk to agree to a settlement with a fine within 48 hours or face charges.
The SEC has been probing whether Musk or his associates engaged in securities fraud during his leveraged buyout of Twitter (now X), including sales of Tesla shares and other financial maneuvers.
Musk’s Public Reaction and Allegations
Musk publicly responded to the SEC’s actions with sarcasm, posting an AI-generated image of Gensler as a snail-like creature and questioning the regulator’s motivations.
Spiro’s letter accused the SEC of “more than six years of harassment” against Musk, citing investigative activities targeting Musk’s health-tech company Neuralink and alleging improper motives behind the agency’s actions. The letter also demanded clarification on whether the White House or SEC leadership directed the current probe.
Details of the SEC Probe and Legal Context
The SEC investigation revolves around Musk’s progressive investments in Twitter and the alleged failure to properly disclose his intentions to acquire the company, which may have impacted other shareholders’ decisions.
A separate civil lawsuit filed by the Oklahoma Firefighters Pension and Retirement System accuses Musk of concealing his Twitter investments to manipulate shareholder decisions.
In 2018, Musk faced SEC charges for tweeting about taking Tesla private at $420 per share without materializing the deal. That case resulted in Musk and Tesla paying $20 million each in fines and a temporary relinquishment of Musk’s Tesla chairmanship.
Political and Regulatory Implications
Musk’s escalating tensions with the SEC occur as he emerges as a significant Republican megadonor. Following President-elect Donald Trump’s election victory, Trump announced plans to remove SEC Chair Gary Gensler, who subsequently stated his intent to resign.
The developments further spotlight Musk’s influence in reshaping regulatory discussions, particularly in light of his financial contributions and social media presence.
Future Steps and Uncertainty
Legal experts suggest that while the SEC settlement demand could escalate, charges are not a guaranteed next step. If the SEC fails to reach a settlement, it could issue a Wells notice before making enforcement recommendations.
Musk’s attorney has signaled resistance to the SEC’s demands, setting the stage for potentially prolonged legal and regulatory battles.
