Interim SEC chief casts sole vote against suing Musk

Five commissioners voted on whether to sue Musk. The action stems from the SEC’s lawsuit against him for allegedly failing to properly report his acquisition of Twitter stock in 2022 before trying to buy the business. According to reports, four of them voted yes, with only SEC Commissioner Mark Uyeda voting against.

The unexpected thing is that the Republican, Hester Peirce, voted yes. However, both Uyeda and Peirce did not agree with what the SEC wanted Musk to do: give up $150 million in claimed unjust enrichment plus a fine. 

⚖️🐦 SEC Voted 4-1 to Sue Elon Musk Over Twitter Share Disclosure Before Trump Took Office

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Under U.S. law, investors who accumulate a stake exceeding 5% of a company’s outstanding shares must disclose that holding within 10 days.  When Musk told the public about it in April 2022, Twitter’s share price went up 27% over the previous close.

The SEC says Musk was able to save $150 million on his purchase of Twitter because he told the public about it 21 days after he had bought it. This allowed him to buy more shares at lower prices.

According to reports, days before the vote, Uyeda asked law enforcement officials working on the Musk case to sign papers saying that the case was not political. According to sources who spoke to Reuters, the staff refused to sign the promise because that’s not common for the SEC. 

Musk has been delaying the case

The SEC sued Musk on January 14, a week after the 4-1 vote in favour that week. Twitter shareholders also sued Musk for fraud.

Sources say that agency investigators investigated whether they could prove any purpose behind his late filing, which could have led to more serious charges. They also investigated the timing of his disclosure.

Musk said he quickly told the SEC about the stake after learning he had misunderstood the rule on disclosure, and the SEC did not bring any charges alleging intent in the end.

The investigation took longer because Musk kept putting it off. He said yes to being questioned twice in 2022, but then said no to being questioned a third time. That’s why the SEC asked a judge to make him show more proof. He showed up on October 3, 2024, but the fight that went on for a year meant that the problem could not be fixed before the election.

Could this be some sort of strategy?  Howard Fischer, a partner at law firm Moses & Singer who worked in two administrations, said,  “They could have brought it closer to the timing of the conduct […] But bringing it at the last minute – literally – it loses credibility. That’s problematic for any agency, especially when dealing with such an obviously politicized issue.”

Therefore, the SEC tried to reach a deal with Musk in December, a month before they sued. It said that the SEC had given Musk 48 hours to settle the investigation by paying a fine or face civil charges. The two sides could not come to an agreement.

Clearly, the delay didn’t work, and the SEC somehow revived the case. Why? According to Robert Frenchman of Dynamis law firm in New York,  “It’s certainly not the violation of the century, but if we care about fair markets and fair enforcement, it would be humiliating for the SEC, a fiercely independent agency, to be seen as backing down.”

A few days ago, Elon Musk got a court notice. The filing said that the civil summons was given to Musk on March 14 at the offices of SpaceX in Brownsville, Texas. The server wrote that when he got to the SpaceX building, three different security guards wouldn’t take the papers, and one told him he was breaking the law. He dropped the papers and left while the guards took pictures of him and his car.

Market leaders are back at advertising with X

A new report says that Musk’s social media site X (formerly known as Twitter) has been able to recover from a big drop in value. The company is now worth $44 billion again. This is a big change for the site because its value dropped after Musk paid $44 billion to buy Twitter in 2022. In fact, Fidelity had marked it down by 72% as of December.

How did it get back? The study says that the return of top advertisers is one of the main reasons why X’s value has gone up again. For instance,  market leaders like Apple and Amazon have started to spend money on the site again, which is helping to bring back revenue after a drop.

In addition, according to Bloomberg, investors, including Musk, have given the social media site about $1 billion in extra shares. As per the story, Darsana Capital Partners took part in the equity round and also bought some of X’s debt. Not long ago.

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