SEC sues Elon Musk over $150M disclosure violation
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he failed to disclose his ownership of over 5% of Twitter stock in a timely manner, which allowed him to purchase shares at artificially low prices.
According to the SEC's filing on January 14, Musk began buying Twitter shares in early 2022 and had acquired more than 5% by March 14 of that year.
However, he did not file the required disclosure report until April 4, 2022, which was 11 days past the deadline.
The SEC claims this delay allowed Musk to continue purchasing shares at lower prices, ultimately resulting in him underpaying investors by at least $150 million.
"Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices," the SEC stated in its complaint.
On the day Musk finally disclosed his stake, Twitter's stock price surged by over 27%, highlighting the impact of his delayed announcement on market dynamics.
Musk's lawyer, Alex Spiro, criticised the SEC's actions as a continuation of what he described as a "multi-year campaign of harassment" against Musk.
In a response posted on X, Musk referred to the SEC as a "totally broken organisation," expressing frustration that it focuses on such issues while other significant crimes remain unpunished.
The lawsuit comes at a pivotal time for the SEC, as Chair Gary Gensler is set to step down soon.
The agency is seeking a jury trial and has requested that Musk pay "disgorgement of his unjust enrichment" along with a civil penalty.
Musk's acquisition of Twitter for $44 billion was finalised in October 2022 after a tumultuous negotiation process during which he attempted to withdraw from the deal.
This legal action adds to Musk's history of disputes with the SEC, including previous investigations related to his public statements about Tesla.
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