The lawsuit could herald further regulatory scrutiny for Musk as he faces backlash over alleged market manipulation.
Lawsuit Alleges Musk Manipulated Twitter Stake Disclosure for Profit
Lawsuit Alleges Musk Manipulated Twitter Stake Disclosure for Profit
SEC claims Musk failed to report significant Twitter stake, costing shareholders $150 million
The U.S. Securities and Exchange Commission (SEC) has initiated legal action against Elon Musk, claiming the billionaire entrepreneur failed to properly disclose a substantial stake in Twitter, ultimately enabling him to purchase shares at "artificially low prices." According to the SEC's lawsuit, filed in a federal court in Washington D.C., Musk is alleged to have saved approximately $150 million (£123 million) in share acquisitions due to his delayed disclosure.
Under SEC regulations, investors who accumulate holdings exceeding 5% must report within ten days. However, the complaint asserts that Musk disclosed his stake 21 days post-acquisition. In response, Musk took to social media to criticize the SEC, labeling it a "totally broken organisation" and accusing it of diverting resources from more pressing criminal matters.
The SEC contends that Musk's actions led to significant economic detriment for Twitter investors. Musk's legal representative, Alex Spiro, denounced the lawsuit as a "sham," maintaining that it constitutes a "campaign of harassment" targeted at his client.
Following Musk's public announcement of his stock purchase on April 4, 2022, Twitter's share value surged by more than 27%, the SEC noted. Musk subsequently acquired the platform for a staggering $44 billion in October 2022, later rebranding it as X.
The lawsuit not only calls for Musk to relinquish "unjust" profits but also seeks to impose financial penalties. This legal pursuit adds to Musk's tumultuous relationship with the SEC, highlighted by previous confrontations, including a notable case in 2018 where Musk faced charges for misleading investors regarding Tesla's privatization.
With SEC Chairman Gary Gensler announcing his forthcoming resignation following Donald Trump’s potential return to the presidency, the implications of this lawsuit could signal a new chapter in Musk’s ongoing regulatory challenges.
Under SEC regulations, investors who accumulate holdings exceeding 5% must report within ten days. However, the complaint asserts that Musk disclosed his stake 21 days post-acquisition. In response, Musk took to social media to criticize the SEC, labeling it a "totally broken organisation" and accusing it of diverting resources from more pressing criminal matters.
The SEC contends that Musk's actions led to significant economic detriment for Twitter investors. Musk's legal representative, Alex Spiro, denounced the lawsuit as a "sham," maintaining that it constitutes a "campaign of harassment" targeted at his client.
Following Musk's public announcement of his stock purchase on April 4, 2022, Twitter's share value surged by more than 27%, the SEC noted. Musk subsequently acquired the platform for a staggering $44 billion in October 2022, later rebranding it as X.
The lawsuit not only calls for Musk to relinquish "unjust" profits but also seeks to impose financial penalties. This legal pursuit adds to Musk's tumultuous relationship with the SEC, highlighted by previous confrontations, including a notable case in 2018 where Musk faced charges for misleading investors regarding Tesla's privatization.
With SEC Chairman Gary Gensler announcing his forthcoming resignation following Donald Trump’s potential return to the presidency, the implications of this lawsuit could signal a new chapter in Musk’s ongoing regulatory challenges.
