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A federal judge on Tuesday rejected Elon Musk’s bid to dismiss a Securities and Exchange Commission lawsuit that claimed he waited too long to disclose his purchases of Twitter shares in 2022.
Washington, DC-based US District Judge Sparkle Sooknanan said Musk’s arguments, including that the SEC overreached in order to punish him for criticizing it, did not warrant dismissal.
Lawyers for Musk did not immediately respond to requests for comment. An SEC spokesperson declined to comment.
The SEC sued Musk in January 2025, saying his 11-day delay in revealing his initial 5% Twitter stake let him buy more than $500 million of shares at low prices. It wants Musk to repay the $150 million he allegedly saved at the expense of unsuspecting investors, plus a civil fine.
Musk has called the delay inadvertent. He also said the SEC case amounted to “selective enforcement” of federal securities laws, designed to target him for criticism of “government overreach” that is protected speech under the Constitution’s First Amendment. Musk also called a $150 million payout an excessive fine that violates the Constitution’s Eighth Amendment, dwarfing the $100,000 penalty the SEC has sought in similar cases.
Judge cites congressional intent to protect investors
The SEC requires shareholders to disclose within 10 calendar days when they reach 5% ownership in order to protect investors who might otherwise be kept in the dark and sell their own stock.
In a 45-page decision, Sooknanan said that requirement reflects the intent of Congress to stop investors from buying shares cheaply while they pursue control of a company.
“The court does not doubt that Mr. Musk would prefer to avoid having to disclose information that might raise stock prices while he makes a play for corporate control,” the judge wrote. “But the balance Congress struck … does not violate the First Amendment.”
Musk has long feuded with the SEC.
In 2018, the regulator sued Musk after he said on Twitter he might take his electric car company Tesla private and had secured funding.
He settled that case by paying a $20 million civil fine, agreeing to let Tesla lawyers review some Twitter posts in advance, and giving up his role as Tesla’s chairman.
Musk bought Twitter for $44 billion in October 2022 and renamed it X.
On Monday, Musk said his rocket and satellite maker SpaceX acquired his artificial intelligence company xAI, whose assets include X. The merger created the world’s most valuable private company, worth about $1.25 trillion.
Musk is worth $851.6 billion according to Forbes magazine, more than triple the $277.5 billion fortune of Google co-founder Larry Page, who ranks second.