Elon Musk failed to dismiss a US Securities and Exchange Commission (SEC) lawsuit over his stock purchases during his 2022 acquisition of Twitter, a judge ruled on Tuesday.
Musk's lawyers had argued that the SEC was applying the law selectively and that the suit infringed on his free speech rights. The judge, however, saw no reason to throw out the case.
The SEC alleges Musk failed to disclose in a timely manner that his stake in Twitter had exceeded 5%, allowing him to buy additional shares at lower prices. After acquiring the company, Musk rebranded Twitter as X.
The agency said Musk's delayed disclosure allowed him to benefit by more than $150 million, while shareholders who sold their stock during that period suffered financial losses. The SEC is seeking repayment of the amount plus an additional penalty.
Musk began buying Twitter shares in early 2022. The SEC said his stake reached 5% on March 14, 2022, triggering a requirement to disclose within 10 days. Musk reported a 9% stake only on April 4, 11 days late, causing the stock price to jump 27%.
Musk spent roughly $44 billion to complete the Twitter purchase in October 2022, largely financed by selling Tesla shares and taking out around $12 billion in loans.
