Musk: US is demanding he pay penalty over disclosures of his Twitter distribute purchases

DETROIT — Elon Musk says the stocks and bonds and swap fee wants him to pay a penalty or face charges involving what he disclosed — or failed to disclose — about his purchases of Twitter distribute before he bought the social media platform in 2022.

In a note posted by Musk on the platform now called X, his lawyer Alex Spiro tells the outgoing SEC chairman, Gary Gensler, that the fee’s demand for a monetary settlement is a “misguided scheme” that won’t intimidate Musk. The note also alleges that the fee reopened an investigation this week into Neuralink, Musk’s computer-to-human brain interface business.

The SEC has not released the note. Nor would it comment on it or confirm whether it has issued such a demand to Musk.

“It is the policy of the SEC to conduct investigations on a confidential basis to preserve the integrity of its investigative procedure,” an agency spokesperson said in an email Friday.

Messages also were left Friday by The Associated Press seeking comment from Spiro.

In the note, Spiro says he is responding to demands from SEC staff members about a multi-year investigation of “sure purchases, sales and disclosures of Twitter shares.” In addition, Spiro is demanding to recognize who directed the actions.

Musk bought Twitter in October 2022 for $44 billion. But a lawsuit filed by a Twitter investor in April 2022 accused Musk of violating a regulatory deadline to reveal that he had accumulated a stake of at least 5%. Instead, according to the complaint, Musk failed to disclose his position in Twitter until he had nearly doubled his stake to more than 9%.

That schedule, the lawsuit alleges, hurt ordinary investors who sold shares in the San Francisco business in the nearly two weeks before Musk acknowledged that he held a major stake in Twitter.

Eventually, the disclosure of Musk’s stake in Twitter caused the worth of its shares to soar 27% from its April 1 close to nearly $50 by the complete of buying and selling on April 4. That improper delay, according to the lawsuit, deprived investors who had sold shares before Musk’s stake in the business was publicly known of the chance to realize significant gains.

Musk has been engaged in a running battle with the SEC since 2018. That was when he and Tesla, his electric car business, each agreed to pay $20 million in fines over tweets Musk had made about having amassed the essential financing to receive Tesla private. Such a shift never happened; Tesla remains a community business.

Musk sought to overturn part of the settlement that required him to have his postings about Tesla reviewed by a Tesla attorney. That provision, he had contended, violated his free talk rights. The dispute made its way to the Supreme Court, which rejected Musk’s appeal without comment.

Gensler, who was nominated to navigator the SEC by President Joe Biden, announced last month that he would step down from his post on Jan. 20, when Donald Trump will be inaugurated as president. Trump has announced that intends to nominate cryptocurrency advocate Paul Atkins to chair the SEC.

Trump has named Musk as co-chair of a “Department of Government Efficiency” to try to reform the federal government.