The SEC is experiencing rifts within as it pursues the billionaire entrepreneur Elon Musk’s lawsuit. The acting SEC chair voted against the case of Musk, who was suing for not disclosing stock purchases on Twitter.
Reports state that the SEC’s five-member panel held a private vote prior to the lawsuit’s launch. Four commissioners voted in favor, while Commissioner Uyeda opposed it. In contrast to him, Commissioner Hester Peirce (who often dissents from SEC enforcement actions) sided with the majority vote.
The Allegations Against Musk.
Musk bought Twitter shares in 2022. US securities require investors to inform when they cross 5% ownership within 10 days. The SEC alleges Musk’s inconsistent reporting enabled him to buy shares at cheaper prices, allowing the tech tycoon to realize a benefit worth almost $150 million.
In a response to the lawsuit, Musk and his lawyer have revealed the SEC’s intention behind implementing a cover-up strategy over the agency’s failure to file a legitimate case. Musk has himself condemned the SEC on social media, calling it a “broken organization” that overlooks real financial crimes.
The Political Undercurrents.
Uyeda’s vote to dissent makes it seem like some of the SEC do not like this deal. According to reports, he asked the enforcement staff to state that the lawsuit was not politically motivated—a strange request the staff reportedly rejected. His opposing view also fits in with broader regulatory shake-ups. In particular, the Trump administration has sought to lower the bar on financial disclosures and question federal agencies’ enforcement actions.
He has until April 4th to respond to the SEC’s case against him. While the legal battle plays out, it could set a precedent for how regulators enforce securities laws on big-name executives going forward.
