WASHINGTON — A high-ranking official at the Securities and Exchange Commission asked enforcement staff members in January to declare that a case they wanted to bring against Elon Musk was not motivated by politics, an unusual request that the staffers refused, according to three people familiar with the matter.

The case went forward, but that request from Commissioner Mark Uyeda, a Republican who is now serving as the commission’s acting chairman, has contributed to a growing sense of unease inside an SEC division that handles high-stakes securities cases, according to the people, who asked not to be named for fear of retaliation.

Uyeda’s request came shortly before the SEC met behind closed doors to vote on whether to follow the enforcement staff’s recommendation to sue Musk in a case related to his acquisition of the social media platform Twitter in 2022, the people said. The staff’s case alleged that in March of that year, Musk missed a deadline to disclose that he’d amassed a significant stake in the company, a failure that kept share prices low for several additional days as he bought more.

After the enforcement team of lawyers and supervisors declined to comply with Uyeda’s request, the agency’s five appointed commissioners met privately to decide the fate of their case in early January. The SEC filed the lawsuit against Musk the following week, days before President Donald Trump took the oath of office. Votes of SEC members are decided by simple majority and generally kept confidential until any resulting litigation is resolved in court.

Several former SEC staffers said Uyeda’s request was highly unusual. The enforcement division investigates insider trading and major frauds, regularly dealing with high-profile companies, public figures and sensitive subjects. Two former senior SEC enforcement attorneys said front-line staffers approach their work objectively and questioning their political motivations would be inappropriate.

Adam Pritchard, a securities law professor at Michigan Law School and a former attorney in the SEC’s general counsel’s office, called Uyeda’s request “very unusual.”

“This is getting close to questioning the integrity of the staff,” Pritchard said. “Just asking the question is very confrontational.”

In response to questions that were sent to the SEC for Uyeda, a spokesperson declined to comment. Musk also didn’t respond to requests for comment. Trump appointed Uyeda on Jan. 20 to serve as the SEC’s acting chairman. Paul Atkins, Trump’s official nominee to permanently lead the commission, has not been confirmed by the U.S. Senate.

The episode underscores the tension inside the SEC and across Washington, where Trump has granted Musk, the world’s richest man, enormous power to reshape federal agencies, including those that can award his companies lucrative contracts or investigate his business practices. As the SEC enforcement staffers prepared to present their case against Musk, Trump had already signaled a more relaxed posture toward financial regulation. Gary Gensler, the SEC chairman who had drawn the ire of bankers and cryptocurrency enthusiasts alike for his aggressive oversight, was on his way out. The head of the agency’s enforcement division had decamped for the private sector.

Meanwhile, Musk, who contributed about a quarter billion dollars to help elect Trump, was preparing his Department of Government Efficiency initiative, which has demanded access to sensitive files in several federal agencies and led to the firing of thousands of public employees.

In December, Musk had taken to X, his renamed social media platform — the very one that SEC staff members had been investigating since 2022 — to publicly taunt Gensler. The billionaire posted a letter from his attorney, Alex Spiro, to the chairman that suggested the SEC was seeking a settlement and was engaged in “an improperly motivated campaign” against Musk.

“We demand to know who directed these actions — whether it was you or the White House,” Spiro wrote. In his post, Musk directed a question to Gensler: “Oh Gary, how could you do this to me?” Gensler declined to comment for this story.

To the SEC’s enforcement division, Musk’s failure to file a disclosure on time was more than just a clerical error; it allowed him to build a stockpile of Twitter shares at an artificially low price. Had the public been made aware of his growing stake, the SEC argued, the share price would have jumped, making his takeover more expensive. The agency estimated Musk saved $150 million by failing to disclose at the moment his ownership stake hit a 5% threshold.

Shortly before the SEC’s January meeting, the San Francisco-based team that had been investigating the matter shared its findings with the commissioners. The team needed approval to file the complaint in court and move ahead with the case. Commissioners regularly get time to scrutinize enforcement cases, to look at their merits and the substance of the inquiries behind them. But in this instance, Uyeda wanted answers to the same sort of question Musk’s attorney asked.

A staff member for Uyeda asked the team in San Francisco and another in enforcement if they would be willing to sign off on a declaration that they had not been motivated by politics, three people familiar with the matter said. It was such a jarring request that multiple officials filed complaints with the SEC’s inspector general, according to two people who have monitored the situation.

After a public announcement that the case was filed, Musk tweeted again. “Totally broken organization,” he wrote on X. “They spend their time on s--- like this when there are so many actual crimes that go unpunished.”

Deadline Passed

The agency’s case against Musk stems from a federal securities rule: Any investor who takes an ownership stake of 5% or more in a public company has 10 days to file a form alerting the public. Musk blew the deadline in March 2022 and continued privately to gather more shares of the social media company, the SEC alleges. By the time he acknowledged his holdings, Musk was 11 days beyond the rule’s deadline and had amassed 9% of the outstanding shares.

The SEC started asking Musk questions about the timing of his disclosures in April 2022, regulatory filings show. The billionaire appeared for two half-days of testimony with the SEC’s enforcement staff that summer but balked when the agency called for a second round of questioning after analyzing thousands of records.

The fight stretched into the fall of 2023, when the SEC asked a court to intervene to require Musk to comply. Musk at the time said the SEC was using its subpoena power to “harass” him.

In September 2024, Musk stood up SEC lawyers who flew to Los Angeles to take his deposition, saying he needed to attend a rocket launch for his SpaceX company. He offered to pay a few thousand dollars to cover the officials’ travel expenses.

As Trump’s inauguration grew nearer, the SEC’s enforcement team approached Musk about settling the case. His attorney wrote in the letter to Gensler that Musk had been given 48 hours to respond.

One person familiar with the Twitter matter acknowledged that the optics of filing a lawsuit against a Trump ally after the election were bad, and there was internal debate by staff members about whether to submit the case to the SEC commissioners only after the new administration took over. But the enforcement staffers who investigated it argued that not filing the case would be a political decision in and of itself, the person said.

‘Return Normalcy’

Trump’s election and early moves by administration officials have signaled wider changes inside the SEC.

Uyeda has used his time as acting chairman to restructure its divisions and pull back from cryptocurrency cases. Many members of a team dedicated to investigating digital assets have been dispatched to other units, two people said, including an 11-year veteran who led crypto-related litigation and has been reassigned to a role in the agency’s information technology department. The Wall Street Journal first reported on the changes.

Even the name of the crypto team has been amended; it is now called the “Cyber and Emerging Technologies” unit. The SEC also established a task force to study the rules governing digital assets, leading agency lawyers to ask for a pause in litigation with crypto exchanges, including Binance. On Feb. 21, Coinbase announced that the SEC had agreed to settle its case against the company for failing to register. Coinbase said in a filing that the dismissal was “with prejudice,” meaning the agency wouldn’t be able to bring similar charges against it in the future.

Musk’s DOGE team, which has swept across other government agencies, may now have the SEC on its agenda. An executive order last week gave the White House direct power over independent agencies such as the SEC, and a DOGE account on X called on the public to send tips with “insights on finding and fixing waste, fraud and abuse” at the commission.

For his part, Uyeda has said his approach to leading the agency is to revert to what it was before the Biden administration. “My first priority is to return normalcy to the Commission,” he said in a Feb. 24 speech in Florida.

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