Back in 2022, when Elon Musk started making moves to acquire Twitter, he made a paperwork error. The Securities and Exchange Commission (SEC) requires large investors to file a disclosure statement within ten days of acquiring 5% of a publicly-traded company’s stock. Elon waited twenty-one days to file his disclosure. This let him buy a lot more shares in secret. As soon as his stock-buying spree was made public, the price of the stock shot up. Elon saved around $150 million by delaying this disclosure.
Of all Elon’s crimes, this is among the least serious. It’s also maybe the simplest. Everyone agrees you have to file the form. Elon didn’t file the form. Elon saved $150 million from this little “oopsie.” So the SEC assesses a penalty of at least a bit more than $150 million, Elon pays the fine, nothing to see here, please move along.
But of course this is the 2020s, and this is Elon we’re talking about, so…
Elon jumping at a rally. Image from NYT article
The SEC investigation took nearly four years. FOUR. YEARS. Some of that was probably the SEC’s fault. They could have moved faster. But much of it was Elon’s lawyers doing elaborate lawyer-things. If you pay your lawyers by the year, you can avail yourself of a whole host of procedural opportunities to drag things out.
And that meant the case was handed off from Biden’s SEC to Trump’s SEC. So (yadda yadda yadda) Elon’s lawyers have negotiated a settlement. Elon admits no wrongdoing, but agrees to pay a $1.5 million penalty via a revocable trust. That’s effectively a 1% tax on the money he saved through his disclosure failure.
The disclosure rules are costly for big investors. Musk would have paid an extra $150 million for Twitter if he had followed the rules. Other activist investors who do follow the rules complain that they make activism too difficult: You can’t build a big stake silently, so your ability to profit from your activism is limited.
But if the rules aren’t binding, well. Musk paid effectively a 1% tax on his savings. “If you’re economic activist investors with political connections,” a reader emailed me, “why would you ever file a 13D on time again? Just run the same playbook and you’re fine.”
This creates an obvious perverse incentive. The SEC rules don’t meaningfully constrain anyone’s behavior if there’s no real penalty for violating them. And also keep in mind that this is a perverse incentive that only applies to the super-wealthy. I am not in a position to buy 5% of a publicly-traded company, so am in no position to benefit from the collapse of this particular SEC rule.
But, even worse, this paperwork-error-loophole doesn’t even apply equally to all of the super-wealthy. Because in 2026, the Administrative State is now solely in the business of doing favors for Donald Trump’s allies and creating problems for Donald Trump’s enemies. Elon can break the disclosure rules, scoop out the profit, and then pay a 1% courtesy fee. Habitual Democratic Party donors ought not try this at home.
And that’s where the effects of Citizens United come into play. The Supreme Court decided that everyone should be able to spend as much as they like to influence U.S. elections. (Election experts warned “uh, hey, this is going to lead to some truly outrageous corruption,” and the Court said “what? LOL I’m sorry I can’t hear you over the sound of this private flight I’m taking with Harlan Crow.”)
The direct impact of Citizens United is that, if you are a super-wealthy individual facing multiple government investigations, the cheapest thing you can do is try to buy the government outright.
Elon Musk’s paperwork error was the simplest and smallest of the government investigations into his business empire. He spent $290 million on the 2024 election. That’s an outrageous, unprecedented sum. And it’s also, for him, a bargain. Had Kamala Harris won, he would have remained on the hook for billions in fines. It was cheaper for him to buy the government outright than to pay what he owed.
This feels like a simple parable of life in the United States in the 2020s. A handful of billionaires own everything. They are sloppy. They don’t bother to obey the rule of law. They profit as a result. And there is nothing — not even the government — that they cannot buy.
It’s a story of simple corruption. It cannot last. But it is not self-correcting. This sort of everyday corruption keeps spreading until everything collapses. Systems like this break down, and then have to be rebuilt through tremendous collective effort.
It’s all just so… pathetic. This was Elon’s smallest infraction, and even in this case, he refused behave as though the social contract applies to him by just paying the damn penalty. And he got away with it, because of course he did, because that is how the Supreme Court and the Trump Administration have chosen to arrange the incentives.