Judge rejects Musk’s bid to dismiss U.S. SEC lawsuit

The SEC sued Musk in January 2025, saying his 11-day delay in revealing his initial 5% Twitter stake in late March and early April 2022 let him buy more than $500 million of shares at artificially low prices

A federal judge on Tuesday rejected Elon Musk’s bid to dismiss a U.S. Securities and Exchange Commission lawsuit that claimed he waited too long to disclose his purchases of Twitter shares in 2022.

U.S. District Judge Sparkle Sooknanan in Washington, D.C., said none of Musk’s arguments warranted a dismissal, including his claim that the SEC overreached in order to punish him for criticizing the agency.

The SEC sued Musk in January 2025, saying his 11-day delay in revealing his initial 5% Twitter stake in late March and early April 2022 let him buy more than $500 million of shares at artificially low prices.

It wants Musk to repay the $150 million he allegedly saved at the expense of unsuspecting investors, plus a civil fine.

Musk has called the delay inadvertent. He also said the SEC case amounted to “selective enforcement” of federal securities laws, designed to target him for criticism of “government overreach” that is protected speech under the U.S. Constitution’s First Amendment. Musk also called a $150 million payout an excessive fine that violates the Constitution’s Eighth Amendment, dwarfing the $100,000 penalty the SEC has sought in similar cases.

The SEC requires shareholders to disclose within 10 calendar days when they reach 5% ownership in order to protect investors who might otherwise be kept in the dark and sell their own stock.

In a 45-page decision, Sooknanan said that requirement reflects the intent of Congress to stop investors from buying shares cheaply while they pursue control of a company.

The judge wrote that the court does not doubt that Mr. Musk would prefer to avoid having to disclose information that might raise stock prices while he makes a play for corporate control. But the balance Congress struck does not violate the First Amendment.