SEC Sues Elon Musk Over Delayed Twitter Stake Disclosure
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he violated federal securities laws by delaying the disclosure of his purchase of a significant stake in Twitter. The complaint, lodged in Washington, D.C. federal court, claims Musk took 11 days longer than the legally mandated timeframe to announce that he had acquired 5% of Twitter's shares.
According to the SEC, Musk’s delay allowed him to acquire over $500 million worth of Twitter shares at artificially low prices, resulting in an underpayment of approximately $150 million to unsuspecting investors. The SEC highlighted that Musk disclosed his stake on April 4, 2022, when he had already increased his ownership to 9.2% of the company. Following this announcement, Twitter's share price surged by more than 27%.
The lawsuit seeks a civil penalty and demands that Musk returns profits he allegedly accrued unjustly. Alex Spiro, Musk's attorney, contested the claims, characterizing the lawsuit as a product of the SEC's "multi-year campaign of harassment." He asserted that Musk has not committed any wrongdoing and labeled the case as an insignificant administrative issue.
This lawsuit adds to Musk's legal challenges concerning his acquisition of Twitter, which he purchased for $44 billion in October 2022 and subsequently renamed X. The case has drawn attention amidst ongoing tensions between Musk and the SEC, which date back to a previous lawsuit settled in 2018 over Musk’s tweets regarding Tesla.
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