The U.S. Securities and Exchange Commission has filed a lawsuit against Elon Musk for allegedly failing to disclose a substantial stake in Twitter, implicating him in unlawful financial gains at the expense of shareholders.
Elon Musk Faces SEC Lawsuit Over Twitter Stake Disclosure Allegations
Elon Musk Faces SEC Lawsuit Over Twitter Stake Disclosure Allegations
US regulator claims Musk misled shareholders, leading to significant financial gains
The U.S. Securities and Exchange Commission (SEC) has initiated a lawsuit against billionaire entrepreneur Elon Musk, alleging that he did not inform the authorities of acquiring a significant stake in Twitter, which enabled him to purchase shares at "artificially low prices." According to the filing, this oversight allowed Musk to save approximately $150 million (£123 million) on his share purchases.
Under SEC regulations, investors must disclose any holdings exceeding 5% within 10 days; however, Musk reportedly delayed the announcement for 21 days post-purchase. In response, Musk criticized the SEC on social media, labeling it a “totally broken organization” and accuses it of misdirecting its resources away from addressing severe crimes that remain unpunished.
The SEC's complaint asserts that Musk's negligence led to considerable financial damage to investors. In a statement relayed to BBC News, Musk's attorney, Alex Spiro, condemned the lawsuit as a "sham" and described it as a "campaign of harassment" directed at Musk.
Following the revelation of Musk's stake in Twitter on April 4, 2022, the social media platform's share price surged by over 27%. Musk eventually acquired Twitter for $44 billion in October 2022, further rebranding it to X.
The SEC's complaint was lodged in a federal court in Washington D.C. on Tuesday, seeking a court order for Musk to relinquish his "unjust" profits and to impose a monetary penalty.
The SEC, led by Gary Gensler, has experienced a contentious relationship with Musk, as the latter is a known ally of President-elect Donald Trump, who has pledged to dismiss Gensler upon assuming office on January 20. Musk's entanglements with the SEC date back to 2018 when he faced charges for allegedly deceiving investors regarding Tesla's privatization plans, for which he reached a settlement that included suspension from his chairman role and restrictions on social media communications.
