The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of failing to properly disclose his acquisition of Twitter stock and later purchasing additional shares at “artificially low prices,” which allegedly harmed other shareholders.
The SEC’s suit, filed on Tuesday in federal court in Washington, D.C., claims that Musk violated securities laws by not promptly disclosing his 5% stake in Twitter. This delay allowed him to acquire shares at a significantly lower price, resulting in a potential loss of at least $150 million to shareholders. According to the SEC, Musk failed to file the necessary report within the required timeframe, disclosing his ownership of Twitter 11 days after the deadline.
Musk, who purchased Twitter in 2022 for $44 billion and subsequently rebranded it as X, initially acquired his 5% stake in the company prior to the acquisition. The SEC contends that this stake should have been disclosed publicly, in line with standard regulations.
In response to the lawsuit, Musk’s lawyer, Alex Spiro, dismissed the SEC’s claims, labeling them as baseless. Spiro argued that the lawsuit was merely an attempt to cover up an alleged administrative oversight, claiming Musk had done nothing wrong. “This is just a sham,” Spiro said in a statement, asserting that the SEC had no valid case.
This is not the first time the SEC has scrutinized Musk’s dealings. In 2021, the agency launched an investigation into Musk and his brother, Kimbal Musk, over potential insider trading violations after they sold large quantities of Tesla stock. Musk, CEO of Tesla, and Kimbal Musk, a Tesla board member, were both investigated in connection with the sales.
The SEC’s current lawsuit focuses on Musk’s delayed disclosure of his Twitter stake, which allegedly allowed him to acquire over $500 million worth of additional shares at lower prices before his ownership was made public. Once Musk revealed his 9% stake in Twitter, the company’s stock price surged by more than 27% on the same day.
The legal action marks another chapter in Musk’s ongoing battles with the SEC, following previous controversies and investigations involving his business dealings. Musk has remained a polarizing figure, particularly with his close ties to former President Donald Trump and his role in efforts to influence U.S. political and regulatory affairs.
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