Pre-Empting the Next Mainstream Media Narrative

The SEC’s latest lawfare crusade let the cat out of the bag…

Donald Trump and Elon Musk … as Fat-Cats.

This week, the Securities & Exchange Commission (“SEC”) filed suit against Elon Musk, alleging that in March 2022, Musk failed to timely disclose his 5% ownership of Twitter, Inc., in violation of the Securities Exchange Act of 1934. According to the SEC’s complaint, by delaying this disclosure, Musk saved himself $150 million at the expense of Twitter’s shareholders.

Here we go again…

Let us start by pointing out that this lawsuit follows the classic ‘Lawfare’ formula that we’ve seen for over 3 years now—a case that can be framed to seem ‘fair’ or ‘objective’ to the lay public but, with a little more context, makes absolutely no sense. Which is where we come in.

The Lawsuit

Beginning in January 2022, rumors started flying that Elon Musk was considering acquiring Twitter (now “X”) in what has become one of the most infamous stock purchases in history. Though the acquisition was formally completed in October 2022, Musk began buying up Twitter common stock starting in January 2022, and by March had amassed shares equaling 5% ownership of the company.

Now, the SEC’s ‘Beneficial Ownership’ rules require any person who acquires 5% ownership in a company to disclose such acquisition to the SEC by filing a ‘Beneficial Ownership form’ within 5 Business Days of the acquisition. The SEC complaint alleges Musk filed the form 11 days late.

During that 11-day period, Musk continued increasing his minority stake in Twitter, purchasing an additional 4% of common stock, worth approximately $500 million. The SEC claims that, if Musk had filed the form on time (prior to buying the additional $500 million in shares), the public would’ve realized he was serious about buying Twitter and Twitter’s share price would have soared—meaning the shares Musk acquired during that 11-day period of non-disclosure would have cost more than the $500 million he paid for them. To support this theory, the SEC points out that, when Musk did belatedly file a Beneficial Ownership form, Twitter’s share price spiked over 25%.

As we warned you, this lawsuit appears fair enough on its face. Missed the deadline —> pay the penalty, right? Read on…

Problems with the SEC’s Lawsuit

Firstly, the SEC’s lawsuit ignores the logical fact that, if Musk had wanted to ‘nickel and dime’ Twitter shareholders (and yes, $150 million is nickels and dimes to Elon Musk) he could have easily done so while circumventing this Beneficial Ownership rule. For example, rather than buying his 9% minority stake in increments, Musk could have purchased all of it in a single lump sum, thus avoiding the necessity of filing a Beneficial Ownership form until after he had acquired all 9%. The fact that he didn’t take this route suggests the untimely filing was a genuine error, not a ruse to get a few shares at a lower price.

The second red flag is that the SEC hardly ever files these lawsuits against people that aren’t named ‘Elon’. Usually, the SEC supposedly prefers to “prioritize education and focus on promoting compliance.” They’re only likely to prosecute Beneficial Ownership violations in instances of “bad faith”, or where the non-compliance is linked to other criminal activity, like money laundering. Needless to say, there isn’t much evidence for that here. And even when these lawsuits are prosecuted, the damages are usually confined to nominal penalties—about $500 per day of non-compliance, which equates to $5500 for Elon’s 11-day filing delay. Instead, the SEC is seeking unusual and severe penalties, including “permanent injunctive relief, disgorgement¹ of ill-gotten gains plus prejudgment interest, and civil penalties.” Meaning, they want $150 million plus interest, plus some other penalties thrown in for good measure. Hmmm.

Additionally, you may recall that in September 2022, Musk publicly stated his desire to pull out of the Twitter deal, after due diligence revealed a huge number of Twitter ‘users’ were actually fake ‘bot’ accounts—meaning the company was worth much less than Musk had offered in the merger agreement. Despite having been misled about Twitter’s actual value by billions of dollars, Musk was prevented from backing out by Twitter shareholders, who sued to enforce the $44 billion offer in the original agreement. And did the SEC investigate the fairness of the representations made in the original merger agreement? Of course not—this only goes one way, remember?

Just so you have this straight: Musk was sued by Twitter shareholders to make good on his original offer, thus grossly overpaying for Twitter. OK, fine. But now, the SEC is suing Musk on behalf of Twitter shareholders… for underpaying for Twitter.

The Next Page in the Playbook

Now that we’ve established this suit has no merit, the bigger question on everyone’s mind may well be: “Why’d the SEC wait until 2025 to sue Musk for something that happened in 2022?” Better yet—why wait to file the lawsuit until 5 days before the Trump administration takes over, at which point current SEC Chairman Gary Gensler (appointed by Joe Biden) will be replaced by Trump’s choice for the role, Paul Atkins? With Atkins at the helm, won’t the new SEC just drop the lawsuit, or at least quickly settle for the typical $5500 penalty? Probably. And that’s the point.

You see, given the timing, this lawsuit serves no logical purpose—other than to supply ammunition for the next anti-Trump narrative. If and when the case is dismissed by the Atkins SEC, we fully expect the media, in their usual faux-moralist manner, to decry the Trump administration for its masculine cronyism and corruption. Rather than Trump undoing the Biden administration’s final attempt at politicized lawfare, the media will paint this story as ‘fat-cat Trump’ looking after his ‘fat-cat friends,’ with Musk being the fattest cat of them all.

This gives us a fun little glimpse into the establishment media’s playbook, which will no doubt be used, overused, and used again several times over the coming months/years. You see, right now, the Democrat establishment don’t look great in the eyes of the American people. The string of lawfare cases culminating in Trump’s sentencing earlier this week, left a decidedly bad taste in Americans’ mouths. Joe Biden’s decision to pardon his son Hunter, discussed here, is the most egregious display of nepotistic corruption in U.S. history. The FBI was recently found to have planted at least 26 ‘assets’ in the crowd during the January 6^th capitol riots, with Americans increasingly believing the FBI had some role in orchestrating the events that took place that day. So where do they go from here? Rather than go back to the drawing board, this lawsuit indicates the next move will be to double-down on the Trump-derangement tactics, using stories like this to explain and justify the lawfare and weaponization of federal agencies that have become the norm for the Biden administration.

So, when Trump finally takes office and his administration begins to undo all of this—such as by dropping the SEC crusades against Musk and others, pardoning imprisoned January 6^th protesters, and perhaps prosecuting members of the Biden administration responsible for actual criminal behavior—we now know what the charade will be. It will be a pathetic attempt at ‘both sides-ism’—a concerted effort to reframe the gross norm-deviations committed by Biden and co. over the last few years as the unfortunate, distasteful reality of politics. Or, even better, as ‘special deviations’ justified by Trump’s ‘special evil’. Don’t you see? Trump is perverting the justice system to persecute political enemies and help his political allies too! They’re all at it! See? See!? SEE!?

Luckily, this tactic only works if we allow it to. Please don’t.

1. We discuss the rare and severe penalty of ‘disgorgement’ (a penalty usually reserved for especially egregious behavior) in our Trump Civil Fraud Article. Link: https://thewholetruthpublications.substack.com/p/the-ny-court-of-appeals-just-tore?r=4dg1kb