“The case is easy. It’s straightforward. But whether they’re going to pick that battle with Elon is another question,” said Dr. Taylor, referring to the prospect of a regulatory lawsuit against the outspoken entrepreneur.
The SEC could drop its investigation without bringing civil claims, as not every probe results in formal action. An SEC lawsuit against Mr. Musk would be unlikely to derail the Twitter deal because the company’s board of directors has endorsed it and the SEC generally lacks the power to stop mergers or take-private transactions, said Jill E. Fisch, a securities and corporate law professor at the University of Pennsylvania Law School.
Regulators could seek a court order preventing Mr. Musk from voting shares he acquired without proper disclosure, but the SEC generally hasn’t pursued that remedy, Ms. Fisch said.