The D.C. federal district court recently addressed Elon Musk’s motion to dismiss the highly anticipated SEC lawsuit regarding Musk’s publicly scrutinized Twitter stock beneficial ownership reporting back in 2022. Musk had disclosed his ownership stake in Twitter on a Schedule 13G, more than 20 days after crossing the 5% threshold, and one day before filing a 13D reporting that he’d accepted a seat on Twitter’s Board.

In the motion to dismiss, Musk argued:

– Section 13(d) unconstitutionally forces speech
– Rule 13d-1 is unconstitutionally vague
– The SEC is selectively enforcing Section 13(d)
– SEC Commissioners are unconstitutionally protected from removal

The court found that “the balance Congress struck in Section 13(d) does not violate the First Amendment” and Rule 13d-1 is not unconstitutionally vague. It also found that Musk hadn’t presented enough evidence (for now) for a “selective enforcement” defense. (As John has shared, Section 13(d) enforcement is not unusual.) On the last point, the court said briefing was “woefully inadequate” for the court to address the issue, but also that:

Ultimately, the Supreme Court has cautioned that “the unlawfulness of [a] removal provision does not strip [an agency head] of the power to undertake the other responsibilities of his office” [. . . and] Mr. Musk has not shown that dismissal of the SEC’s Complaint is an appropriate response to the SEC Commissioners’ purported unconstitutional protections from removal.

If you read the related documents in full, remember that the activities that are the subject of this complaint preceded the amendments to Regulation 13D-G that were adopted a little over two years ago that tightened the filing deadlines.