A federal judge has allowed a class-action lawsuit against Elon Musk to proceed, rejecting Musk’s motion to dismiss. The suit alleges that Musk’s delayed disclosure of his Twitter stock purchases artificially deflated share prices, causing losses for former shareholders. The judge found that Musk’s actions, including a misleading tweet, created a false market signal. This ruling follows a similar lawsuit filed by the SEC and comes as Musk recently announced the merger of his AI venture, xAI, with X (formerly Twitter).
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A court summons was served to Elon Musk on March 14th at SpaceX headquarters regarding the SEC’s lawsuit alleging his late disclosure of Twitter stock purchases before his acquisition. The lawsuit claims Musk’s delayed reporting allowed him to underpay for shares by at least $150 million. Musk now serves as a top advisor to President Trump, whose administration has significantly weakened the SEC through budget cuts and procedural changes. Musk must respond to the summons by April 4th.
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The SEC filed a lawsuit against Elon Musk, alleging he violated federal securities laws by delaying disclosure of his Twitter stock purchases in 2022. This delayed disclosure, the suit claims, allowed Musk to acquire shares at artificially low prices before his takeover, costing other investors at least $150 million. The SEC seeks disgorgement of Musk’s unjust enrichment and civil penalties. Musk, who has a history of clashes with the SEC, vehemently denies wrongdoing, calling the suit a politically motivated attack. The timing of the lawsuit, preceding the SEC chairman’s resignation and a potential change in administration, adds another layer of complexity.
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John Q. Hosedrinker