In the complaint, regulators claim Musk, 53, improperly waited 11 days to disclose his Twitter stockholdings and saved himself at least $150 million by doing so—at Twitter shareholders’ expense. The lawsuit from regulators comes five weeks after Musk openly challenged departing SEC chair Gary Gensler by posting a letter from his lawyer to Gensler on X; the letter to Gensler accused the commission and its staff of harassing Musk for six years and demanding that he pay a fine or face charges. The SEC’s lawsuit is the latest in a bitter back-and-forth between Musk and the commission over disclosures, tweets, posts, requests for interviews, and other disagreements. 

In a statement, Musk’s lawyer Alex Spiro told Fortune the regulator’s action on Tuesday was “an admission by the SEC that they cannot bring an actual case.”

“Mr. Musk has done nothing wrong and everyone sees this sham for what it is,” said Spiro, partner at law firm Quinn Emanuel, in an email. 

The SEC has alleged Musk violated a disclosure requirement by failing to file a timely beneficial ownership report, known as a 13D filing. Regulations require that anyone who acquires more than 5% of a public company’s voting shares must file a report to regulators within 10 days of crossing that ownership threshold. (This rule was amended to five business days in 2023.) A 13D filing is required when an investor plans to try to exert control, such as when an activist investor buys a position in a company’s stock. A 13G filing, on the other hand, is meant for passive investors with no intentions to control a company. 

According to Spiro, the lawsuit is petty and trivial and comes as the SEC is in retreat.

“[T]he SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form—an offense that, even if proven, carries a nominal penalty,” said Spiro. 

Amassing a stake in Twitter

According to the SEC’s account laid out in the complaint, starting in January 2022 Musk directed his personal wealth manager to have a broker start buying up large blocks of Twitter stock for Musk—but not to exceed 5%. The suit claims Musk’s wealth manager warned the broker to buy the stock in a way that would blunt any increases in Twitter’s stock price, given the increased demand from a large buyer. The broker bought stock from Jan. 31, 2022 through February 2022, the SEC alleged. 

Around late February, the broker suggested that Musk get legal advice about his holdings, but neither Musk nor his wealth manager did so, the complaint states. By about Feb. 28, 2022, the broker asked Musk’s wealth advisor if Musk wanted more Twitter stock—past the key 5% threshold. On March 8, Musk’s manager told the broker to keep buying. On March 14, 2022, the broker told Musk’s advisor that Musk was in possession of more than 5% of Twitter’s stock and at that point, a 13D filing from Musk should have been made to regulators by March 24, the SEC claims. 

Instead, between March 14 and March 24, Musk kept up his buying spree, and after the close of trading on March 24 he owned more than 7% of Twitter’s outstanding stock. The next day on March 25, Musk bought another 3.5 million shares of Twitter at a price of $38.20 per share and by the close of trading that day, Musk was holding 8% of the company’s float. 

That weekend, Musk chatted with an unnamed Twitter board member and informed the director he owned at least 7% of the stock, the SEC alleged. The board member suggested that Musk join the Twitter board. Musk was interested, the SEC claims, then asked the board member if he had ever considered taking the platform private. The board member said yes, according to the SEC’s account. 

After the talk, the board member sent a group text to the Twitter board chair, another board member, Twitter’s CEO, and Musk. “Elon – everyone excited about prospect of you being involved and on board. Next step is for you to chat w three of them so we can move this forward quickly. Maybe we can get this done next few days.” The text to the CEO and board members was capped off with a fingers-crossed emoji. 

The very next day, Musk bought another 2.6 million shares of Twitter. The day after that he bought himself another 2.9 million shares. Two days later, Musk spoke to another unnamed board member and Musk told the director he was considering his options, which included buying Twitter outright, the SEC stated. That day, Musk bought 2 million more shares. 

That evening, Musk met with Twitter’s CEO and the board chair in the Bay Area, the SEC alleged. The CEO and board chair told Musk they wanted him to join Twitter’s board but needed to follow internal governance processes before they could formally offer him a seat at the table. Musk replied that he was interested in buying Twitter, the SEC alleged. 

On Friday, Musk bought another 2.2 million shares of the stock and by the close of trading, he owned more than 9% of Twitter’s outstanding shares, the SEC claimed. That weekend, another Twitter board member formally offered Musk a seat on the board, which Musk verbally accepted. Twitter responded by sending paperwork to Musk’s wealth manager so Musk could start the process of becoming a corporate director. 

The following Monday, April 4, Musk filed a 13G beneficial ownership report with the SEC, disclosing for the first time that he held more than 5% of Twitter’s stock. In the filing, Musk indicated he hadn’t acquired the stock with the intent to change or influence control of Twitter, the SEC alleged. The stock rallied 27% on the news. 

On Tuesday, April 5, Musk disclosed that he had accepted a seat on the Twitter board and that he held more than 9% of the stock by filing a 13D beneficial ownership report, authorities claimed. 

The SEC alleged that had Musk properly disclosed his beneficial ownership report, Twitter’s stock would have jumped then rather than on April 4.  

Overall, during the 11-day period when Musk should have made the disclosure, he spent another $500 million buying up more of Twitter, the SEC said. But since he didn’t make the required disclosure, Musk underpaid for the shares by more than $150 million. Investors who sold Twitter during this period suffered “substantial economic harm,” according to authorities. 

“As alleged, because Musk failed to timely file a beneficial ownership report with the SEC, he was able to make these purchases of Twitter common stock at artificially low prices from the unsuspecting public, who had not yet priced in the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose,” the SEC wrote in a statement.