While Elon Musk is currently embroiled in a dispute with the US Securities and Exchange Commission over X (formerly Twitter), it is interesting to note that he has also clashed with the SEC in the past, this time over Tesla.
The Securities and Exchange Commission can be summed up as the American stock market watchdog. In mid-January, the SEC announced that it had filed a complaint against Elon Musk, head of X and Tesla in particular, in a case of fraud linked to the social network formerly known as Twitter.
The SEC is accusing the billionaire of failing to properly disclose his stake in X “in a timely manner”, as required by US federal law. The Commission alleges that this failure allowed Musk to acquire shares in the platform at “artificially low prices” that would have saved him “at least $150 million”. A situation that could force Elon Musk to pay a painful fine.
Elon Musk and the SEC, an old story
This isn’t the first time Elon Musk has found himself in the SEC’s crosshairs. In 2023, during his appearance on Lex Fridman’s podcast, the billionaire recounted how he had to pay a fine to the SEC to prevent Tesla from going bankrupt, even though he was found not guilty by the San Francisco court at the time. “The jury unanimously found me not guilty. The reason I agreed to pay the fine to the SEC was not because the SEC was right. It was extremely bad behaviour on the part of the SEC. Corruption, frankly. But if I hadn’t agreed to pay the fine, Tesla would have gone bankrupt immediately”, he explained at the time.
It’s like putting a gun to your child’s head
The reason for this is that, at the time, Tesla was really in a bad way. “Our finance director told me that the banks would suspend our credit lines immediately. If they had suspended our credit lines at that time, we would have gone bankrupt instantly”, Elon Musk sums up. “There would never have been any possibility of a lawsuit, because Tesla would have died.”
The billionaire’s comments about the SEC are not exactly kind: “It’s like someone holding a gun to your child’s head and asking them to pay $20 million. It’s like a hostage negotiation.”
Originally, the SEC’s complaint targeted a tweet from Elon Musk, which could be interpreted as an announcement that Tesla was going public. The commission believed that the billionaire had sought to mislead investors, but the San Francisco court ruled that the accusations were unfounded. This conclusion explains why the SEC is still on fire with the billionaire, who has decided not to cooperate in the new X-related case.
