Elon Musk was sued by the US Securities and Exchange Commission on Tuesday, accusing the world’s richest man of waiting too long to disclose in 2022 that he has bought a large stake in social media company Twitter. acquired the stake, which he later bought.
In a complaint filed in Washington, DC federal court, the SEC said Musk violated federal securities law by waiting a long 11 days to disclose his initial purchase of 5% of Twitter’s common shares.
SEC rules require investors to disclose within 10 calendar days, or in Musk’s case, by March 24, 2022, when he crosses the 5% ownership threshold.
The SEC said that at the expense of unsuspecting investors, Musk bought more than $500 million of Twitter shares at artificially low prices before disclosing his purchases on April 4, 2022, by which time he owned 9.2%. There was a stake.
Twitter’s share price rose more than 27% after that disclosure, the SEC said.
Tuesday’s lawsuit seeks to force Musk to pay a civil penalty and deprive him of profits he was not entitled to.
Musk eventually bought Twitter for $44 billion in October 2022 and renamed it X.
Musk’s lawyer Alex Spiro, in an email, called the SEC lawsuit the culmination of the regulator’s “multi-year campaign of harassment” against his client.
He said, “Today’s action is an admission by the SEC that they cannot bring a genuine case.” “Mr. Musk has done nothing wrong and everyone sees this sham for what it is.”
Spiro said the lawsuit only addresses “alleged administrative failure to file a single form – an offense that carries a nominal penalty even if proven.”
Other lawsuits over Twitter purchase
Through businesses like electric car maker Tesla and rocket company SpaceX, Musk, an adviser to US President-elect Donald Trump, is worth $417 billion, according to Forbes magazine.
Forbes said his wealth is almost double that of Amazon.com founder Jeff Bezos, who is the world’s second-richest person with $232 billion.
The SEC sued Musk six days before Trump’s January 20 inauguration.
SEC Chairman Gary Gensler is stepping down that day, and Paul Atkins, whom Trump nominated to succeed him, is expected to review many of Gensler’s rules and enforcement actions.
Musk is also being sued in Manhattan federal court by former Twitter shareholders over the late disclosure.
In that case, Musk has said it is impossible to believe he intended to defraud other shareholders, and there were “all indications” that his delay was a mistake.
Musk has had a long-running feud with the SEC, including suing him in 2018 over his Twitter posts about taking Tesla private and securing funding to do so.
He settled that lawsuit by paying a $20 million civil penalty, agreeing to have some Twitter posts pre-reviewed by Tesla lawyers and leaving his role as Tesla chairman.
The SEC also sought sanctions on Musk after he missed court-ordered testimony in a Twitter investigation last September so he could attend the launch of SpaceX’s Polaris Dawn mission in Cape Canaveral, Florida.
A federal judge in San Francisco rejected that request, as Musk later testified and agreed to pay the SEC’s travel costs.
The case is SEC v. Musk, US District Court, District of Columbia, number 25-00105.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
