The U.S. Securities and Exchange Commission has taken legal action against Elon Musk, claiming he misled investors regarding his Twitter share acquisitions, potentially costing them significantly.
SEC Files Lawsuit Against Elon Musk Over Twitter Stake Disclosure
SEC Files Lawsuit Against Elon Musk Over Twitter Stake Disclosure
The SEC alleges Musk saved $150 million by failing to disclose stake acquisition in Twitter.
The U.S. Securities and Exchange Commission (SEC) has initiated a lawsuit against Elon Musk over allegations that he failed to properly disclose his growing stake in Twitter (now called X), which reportedly allowed him to acquire shares at artificially inflated prices, allegedly saving him $150 million. The suit was filed in a federal court in Washington, D.C., claiming that Musk violated SEC regulations that mandate investors to disclose holdings exceeding 5% within a 10-day window; Musk only disclosed his stake 21 days after surpassing that threshold.
In an immediate response, Musk criticized the SEC, labeling it a "totally broken organization," and implied that the agency should focus on more significant criminal matters instead of targeting him. His lawyer, Alex Spiro, dismissed the lawsuit as a "sham" and accused the SEC of harassing Musk.
Following Musk’s announcement of his stake on April 4, 2022, Twitter’s stock saw a surge of over 27%. Ultimately, Musk completed the acquisition of Twitter for $44 billion in October 2022 and has since rebranded the platform. The SEC lawsuit not only seeks to recover what it terms “unjust profits” for Musk but also includes demands for financial penalties.
This legal clash is just one of several encounters Musk has had with the SEC, including a notable 2018 case where he was charged with misleading investors regarding funding for taking Tesla private. Musk agreed to settle that issue, which included stepping down as chairman of Tesla's board and accepting restrictions on his social media activity regarding the company.
As SEC chairman Gary Gensler announced plans to resign if Donald Trump retakes the presidency, the future trajectory of this lawsuit and Musk's continued relationship with the SEC remains uncertain.
