The U.S. Securities and Exchange Commission has filed a lawsuit against Elon Musk in federal court as time runs out for the Biden administration. The regulations at hand are relatively simple. The timing of filing a complaint is more complicated.

The SEC's complaint focuses on Musk's acquisition of Twitter stock in early 2022. According to the complaint, Musk failed to notify the agency within 10 calendar days that he had acquired more than 5% of the company's common stock. If true, such delays would violate federal security laws. "As a result, Musk was able to continue purchasing shares at artificially low prices, which resulted in him underpaying at least $150 million for shares purchased after beneficial ownership reports were due," the SEC said. The SEC has requested a jury Group trial.

This should all be very simple. "This appears to be a simple case that clearly violates established SEC rules," said James Park, a professor at the UCLA School of Law who focuses on securities regulation and corporate law. Either file within 10 days or not; the SEC claims Musk failed to do so. The agency said he purchased enough shares by March 14 of that year to cross that threshold and did not publicly disclose his ownership until April 4. (The SEC said Musk was technically 11 days late because he continued through March 24.)

However, it took the SEC nearly three years to file a lawsuit. “The question is, why are they doing this now,” said David Rosenfeld, former co-director of the SEC’s New York Office of Enforcement and now a professor at Northern Illinois University School of Law. "The only reasonable answer is that they want to get this done before there is a change of administration." Rosenfeld noted that he had not reviewed the SEC complaint in depth.

In less than a week, the change in administration has created a more favorable regulatory environment for Musk. Musk has donated hundreds of millions of dollars to political action committees supporting Donald Trump's presidential campaign and has reportedly been a close adviser to the president-elect. transition period. Current SEC Chairman Gary Gensler is likely to be replaced by Trump's nominee Paul Atkins, who is widely seen as supporting lighter regulations.

Musk's attorney, Alex Spiro, said he viewed the complaint as a farewell. He wrote in an email: "As the SEC retreats and departs, the SEC's multi-year harassment campaign against Mr. Musk culminates in the thorny issue of a single charge against Mr. Musk. complaint."

Although the document was filed before Trump's Jan. 20 inauguration, the investigation that led to the complaint has been ongoing for years. The agency had to subpoena Musk in May 2023 to obtain his testimony in the investigation, and said Musk canceled the subpoena two days before his scheduled testimony in September. A federal court upheld a previous decision to force him to testify in May 2024; on September 10, SEC lawyers flew to interview him, but he again prevented them from participating in a SpaceX launch.