Tesla (TSLA) CEO Elon Musk has filed a motion to dismiss a civil lawsuit brought by the U.S. Securities and Exchange Commission (SEC). The suit accuses him of waiting too long in 2022 to reveal his large stake in Twitter, now called X. The SEC says Musk broke disclosure rules by missing the 10-day filing deadline required when investors cross a 5% ownership threshold.
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SEC Alleges Musk Delayed Filing to Benefit
According to the SEC, Musk should have disclosed his stake by March 24, 2022, but instead revealed his position 11 days late on April 4. By then, he had quietly built a 9.2% stake worth more than $500 million at artificially suppressed prices.
Regulators argue this allowed Musk to keep buying Twitter shares at lower prices, leaving other investors at a disadvantage. The agency wants Musk to pay fines and give up any profits tied to the delay.
Musk Argues He Acted in Good Faith
Musk’s lawyers said that he stopped buying Twitter shares once his wealth manager checked with securities lawyers about filing rules. They argue Musk disclosed his position the very next business day and did not act recklessly or with bad intent.
His team also accused the SEC of unfairly targeting him because of his “protected criticism of government overreach.”
Musk Faces Deadline to Respond
Musk faced a court deadline this week to respond to the SEC complaint. His lawyers said the case should never have been filed, pointing out that the issue centers on a single delayed form that Musk corrected more than three years ago. They added there is no ongoing violation.
While Tesla is not involved in the case, Musk’s legal troubles can still affect investor confidence in his companies.
Is Tesla a Buy, Sell, or Hold?
On Wall Street, analysts have maintained a cautious stance on Tesla stock. According to TipRanks, TSLA stock has received a Hold consensus rating, with 14 Buys, 15 Holds, and eight Sells assigned in the last three months. The average stock price target for Tesla is $307.90, suggesting a potential downside of 11.01% from the current level.
