Earlier this week, the Securities and Exchange Commission filed a civil complaint in the U.S. District Court for the District of Columbia. The complaint alleges that Mr. Musk in acquiring shares of Twitter failed to file a required beneficial ownership report within the time then prescribed in Exchange Act Section 13(d) and Rule 13d-1. The SEC is seeking, among other things, disgorgement and a civil penalty. According to the SEC, Mr. Musk underpaid by at least $150 million for his purchases of Twitter stock.

The most obvious question raised by the SEC's filing is one of timing. The events in question occurred nearly three years ago - in the Spring of 2022. The facts alleged in the complaint are fairly straightforward according the complaint - Mr. Musk should have filed no later than March 24, 2022 but failed to do so until April 4 (a Schedule 13G) and April 5 (a Schedule 13D), 2022. Two plus years seems like an inordinately long time for the SEC to conclude that April 4 falls after March 24 on the calendar. The SEC initiated its investigation, Donald Trump was elected President and will assume office on January 20, 2025. Chairman Gensler has announced that he will resign on noon on the day of Mr. Trump's inauguration. Thus, the timing of the filing of the SEC's complaint ineluctably creates the implication that the SEC wanted the complaint filed before there was shift in the party alignment of the Commissioners.

There is also a question about how the SEC investigated Mr. Musk and whether it is targeting him for his criticism of the agency and his association with Donald Trump. The SEC has conducted various investigations of Mr. Musk since at least 2018 when it settled charges against Tesla and Musk relating to Mr. Musk's tweets. In the present case, the SEC's Division of Corporation Finance asked about Mr. Musk's Schedule 13G filing on the same day that it was filed. Shortly thereafter, the SEC's Enforcement Division intervened “so that the same individuals investigating Mr. Musk's compliance with the consent decree could also manage the present investigation.” Sec. & Exch. Comm'n v. Musk, 2024 WL 1511903, at *2 (N.D. Cal. Feb. 10, 2024) (footnote omitted). The SEC opened the current investigation the day after it closed a prior investigation. Id. Mr. Musk has been a high profile critic of the SEC, famously dubbing it the "Shortseller Enrichment Commission". He is co-leading Mr. Trump's advisory commission on government efficiency (the Department of Government Efficiency or DOGE).