How will president Trump handle the SEC case of best friend Elon Musk?

Elon Musk, the richest man in the world and known best friend of President-elect Donald Trump, is facing heat from the SEC over accusations tied to his chaotic Twitter takeover.

The lawsuit, filed in a Washington, D.C. federal court, claims Elon missed a key disclosure deadline when buying a stake in Twitter in 2022. According to the SEC, this delay cost Twitter shareholders over $150 million, as they unknowingly sold shares before prices surged.

Elon’s legal team isn’t backing down, dismissing the case as baseless and politically motivated. But the timing of the lawsuit—right as Trump prepares to take office—has left everyone asking the same question: Will Trump’s loyalty to Elon affect how this plays out?

Elon vs. the SEC: Another round

This isn’t Elon’s first run-in with the SEC. The regulator went after him in 2018 when he tweeted about taking Tesla private, claiming he had “funding secured.”

That tweet sent Tesla shares skyrocketing and Elon got sued for securities fraud. He settled the case by coughing up $20 million and stepping down as Tesla’s chairman. It was messy, but Elon survived.

Fast forward to Twitter. In 2022, Elon bought a massive chunk of Twitter stock—9% of the company—before launching his infamous takeover bid. The SEC says Elon didn’t file the required disclosure form when he hit the 5% ownership mark, a move that would’ve tipped off the market about his plans. 

Instead, he waited 11 extra days, allegedly stockpiling shares at a discount. When Elon finally disclosed his stake, Twitter’s stock price jumped 27%, leaving earlier sellers out in the cold.

SEC rules are clear: once you hit 5%, you’ve got 10 days to file. Elon didn’t, and the agency says it wasn’t an accident. They’re accusing him of gaining an unfair advantage by staying quiet.

But the SEC stopped short of calling it insider trading, which some experts found surprising. Elon, naturally, sees it differently. His attorney, Alex Spiro, called the lawsuit a joke, saying Elon “has done nothing wrong and everyone sees this sham for what it is.” The SEC, however, claims Elon owes more than $200 million to make up for the disaster.

Trump’s SEC: New Sheriff, new rules?

Trump has tapped Paul Atkins, a vocal critic of strict regulations, to lead the SEC. If Atkins gets confirmed, Elon could have a more sympathetic regulator overseeing his case. But that doesn’t mean Trump can wave a magic wand and make the lawsuit disappear.

John Coffee, a law professor at Columbia, says any decision to drop the case would have to come from the SEC commissioners, not Trump directly. “There will be a political interpretation that the Trump administration is protecting Trump’s good buddy,” he said.

Even if the agency wants to kill the case, it won’t happen overnight. Senate confirmation hearings for Atkins haven’t even been scheduled yet, meaning the current SEC leadership remains in charge for now.

The political implications are huge. If the SEC drops the case, critics will accuse Trump of shielding Elon. But if it moves forward, it risks souring Trump’s relationship with one of his most prominent allies. It’s a tightrope act, and no one knows how it will end.

A case that won’t go away

The SEC’s lawsuit is unusual for another reason: how long it’s taken to get this far. It’s pretty cut-and-dried. It should have been resolved in a year. Instead, the case has dragged on, partly because of Elon himself.

In September, Elon blew off an SEC deposition to attend a SpaceX rocket launch, leaving the agency’s lawyers stranded in Los Angeles. Elon offered to reimburse their travel expenses—a move the SEC found laughable. His stalling has only added to the tension, making an already contentious case even messier.

Still, the SEC seems determined to hold Elon accountable. The agency alleges that Elon’s actions weren’t just a paperwork oversight but a calculated move to save money. They say the late filing allowed him to scoop up Twitter shares at a discount, reaping massive gains once the stock price jumped.

While the SEC has fined other companies for similar violations—Alphabet Inc., for example, paid $750,000 last year—the $200 million figure attached to Elon’s case is unprecedented.

Some experts say the SEC is sending a message by going after Elon so aggressively. David Slovick, a former SEC attorney, thinks the agency wants to make an example of him.

“If this were any other president and any other defendant, this case would move forward without question. But because it’s Trump and Elon, all bets are off.”

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