The U.S. Securities and Exchange Commission has filed a lawsuit against Elon Musk for failing to timely disclose his significant ownership stake in Twitter, which purportedly allowed him to acquire shares at reduced prices, costing investors dearly.
Elon Musk Faces SEC Lawsuit Over Late Twitter Stake Disclosure
Elon Musk Faces SEC Lawsuit Over Late Twitter Stake Disclosure
The SEC alleges Musk saved $150 million by delaying the disclosure of his Twitter share acquisition.
The U.S. Securities and Exchange Commission (SEC) has launched a lawsuit against Elon Musk, the billionaire CEO of Tesla and SpaceX, alleging that he failed to disclose his growing stake in Twitter, resulting in significant financial benefit to himself at the expense of investors. The SEC claims that this omission allowed Musk to buy shares at "artificially low prices," enabling him to save approximately $150 million.
Under existing SEC regulations, investors whose holdings exceed 5% of a company's shares are required to report that ownership within 10 days. However, Musk is accused of failing to disclose his stake until 21 days after surpassing that threshold, according to the court filing.
In response, Musk took to social media, condemning the SEC as a "totally broken organization" and critiquing its focus on him rather than addressing "real crimes" that go overlooked. The complaint asserts that Musk's failure to report his stake brought about considerable economic damage to investors. Musk's legal representative, Alex Spiro, dismissed the lawsuit as a "sham" and claimed it constituted harassment against his client.
The SEC also noted that following the public revelation of Musk's investment in Twitter on April 4, 2022, the company's share price jumped by over 27%. Musk later acquired Twitter for $44 billion in October 2022, subsequently rebranding the social platform as X.
The suit, filed in Washington, D.C., seeks a court order compelling Musk to surrender what the SEC deems "unjust profits" along with an imposition of fines. This legal challenge is not Musk's first encounter with the SEC; he faced similar scrutiny in 2018 over statements made regarding Tesla.
As the situation unfolds, all eyes are on the implications this lawsuit might have on Musk's business dealings and his ongoing relationship with the SEC, especially as regulatory leadership is set to change with the upcoming Trump presidency.
