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A lawsuit against Elon Musk was initiated during the final days of the Biden administration, and with the forthcoming leadership under President-elect Donald Trump, who has appointed Musk to lead the new Department of Government Efficiency (referred to as “DOGE”), it is anticipated that the new government may be less inclined to pursue the charges against Musk aggressively.
Changes in SEC Leadership
Current SEC Chair Gary Gensler is set to depart the agency, and Trump’s nominee to succeed him, Paul Atkins, testified before Congress in 2019 advocating for a reduction in the SEC’s disclosure requirements. With Gensler’s exit and the departure of another Democratic commissioner, the Republican party will gain a 2-1 majority on the SEC while the Senate considers Trump’s nomination, as noted in a Wall Street Journal article.
However, the possibility of an immediate dismissal of the lawsuit against Musk is not guaranteed. According to the Journal, the enforcement of disclosure rules is “routinely maintained.” As the WSJ points out, the new allegations against Musk may not be easily dismissed under a more favorable administration. This is primarily because the alleged violation falls under a strict-liability rule, implying regulators are not required to demonstrate intent to violate the rule in order to initiate enforcement actions.
The SEC has indicated that its investigation encompasses more than the delayed disclosure, having reportedly gathered thousands of documents. In a statement to the court in October 2023, the SEC mentioned that its inquiry “pertains to considerably more than the timing and substance of a particular SEC filing; it also relates to all of Musk’s purchases of Twitter stock in 2022 and his statements and filings with the SEC during that year.”
Furthermore, Musk’s legal team disclosed that the SEC had suggested the possibility of “charges on numerous counts” should Musk decline to settle. Nonetheless, the lawsuit that was officially filed focuses solely on the late disclosure issue. The SEC is pursuing a civil penalty and the retrieval of Musk’s purported unjust profits, along with applicable interest, through a jury trial.
Source
arstechnica.com