The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he failed to disclose his significant stake in Twitter, allowing him to purchase shares at “artificially low prices.” The SEC is also claiming that the Tesla CEO saved $150 million (£123 million) in share purchases due to this non-disclosure.
According to SEC regulations, investors who acquire more than 5% of a company’s shares must report their holdings within 10 days. However, Musk disclosed his stake 21 days after surpassing the threshold, the lawsuit states.
In a social media post, Musk lambasted the SEC, calling it a “totally broken organization” and accusing it of wasting time on his case while “many actual crimes go unpunished.”
The SEC’s complaint had emphasised that Musk’s actions caused significant economic harm to investors. Meanwhile, Musk’s lawyer, Alex Spiro, described the lawsuit as a “sham” and “a campaign of harassment” against Musk.
Twitter’s share price surged by over 27% after Musk publicly disclosed his stake on April 4, 2022. Musk later acquired Twitter for $44 billion in October 2022 and rebranded the platform as X.
The SEC submitted the complaint to a federal court in Washington, D.C., on Tuesday, January 14, seeking to recover “unjust” profits and impose a fine on Musk.
The SEC Chairman Gary Gensler, had announced his resignation effective January 20, which coincides with Donald Trump’s return to the White House, especially as he [Trump] had previously stated his intention to remove Gensler on his first day in office.
Under Gensler’s leadership,
The SEC has frequently clashed with Musk (a close ally of the president-elect) under Gensler’s leadership.
The Tesla CEO’s conflicts with the SEC date back to 2018 when the regulator charged him with securities fraud for claiming he had “funding secured” to take Tesla private. Musk settled the charges by stepping down as Tesla’s chairman and agreeing to restrictions on his social media posts about the company.
