Will Trump's Close Ties with Musk Affect the Latter's Case with SEC?

Elon Musk, the world's richest man and a close ally of President-elect Donald Trump, is under scrutiny from the SEC over his controversial Twitter takeover.

A lawsuit filed in a Washington, D.C. federal court accuses Musk of missing a key disclosure deadline when acquiring Twitter shares in 2022, allegedly costing investors over $150 million as they sold before prices surged.

Musk's legal team has dismissed the case as baseless and politically driven.

With the lawsuit emerging just as Trump prepares to take office, speculation is mounting: Will his administration's ties to Musk influence the outcome?

SEC Slaps Musk with Lawsuit

Musk's battles with the SEC are nothing new.

In 2018, the agency sued him for securities fraud after he tweeted about taking Tesla private with "funding secured," sending Tesla's stock soaring.

The case ended in a $20 million settlement and his resignation as chairman. Now, history is repeating itself—this time with Twitter.

In 2022, Musk quietly acquired a 9% stake in Twitter before launching his takeover bid.

SEC rules require investors to disclose when they surpass 5% ownership within 10 days.

Musk waited 11 extra days, allegedly buying shares at a discount before revealing his stake—triggering a 27% surge in Twitter's stock and leaving early sellers at a loss.

The SEC argues this was not an accident but a calculated move, though it stopped short of labelling it insider trading.

Musk, unsurprisingly, rejects the allegations.

His attorney, Alex Spiro, dismissed the lawsuit as politically motivated, insisting Musk "has done nothing wrong."

The SEC, however, is demanding over $200 million in penalties, setting the stage for another high-profile showdown.

Will Trump Use His Position to Shield Musk or Will He Not Interfere?

Trump has nominated Paul Atkins, a staunch opponent of heavy-handed regulations, to lead the SEC—a move that could tilt the scales in Musk's favour.

If confirmed, Atkins might take a more lenient approach to Musk's case, but legal experts say Trump cannot simply make the lawsuit vanish.

Columbia law professor John Coffee explains that only the SEC commissioners, not the president, can decide to drop the case:

“There will be a political interpretation that the Trump administration is protecting Trump's good buddy.”

Some speculate that the lawsuit will be dropped by the incoming SEC Chair.

Even if the SEC leans toward dismissal, the process will take time—Atkins' Senate confirmation has not even been scheduled, leaving the current leadership in charge for now.

The stakes are high.

If the SEC abandons the case, Trump will face accusations of shielding Musk.

If it proceeds, it could strain his relationship with one of his most influential allies.

With political and legal forces colliding, the outcome remains uncertain.

The question is: will the President-elect abuse his authority to help his "best friend", or will the case proceed without interference?