Lawsuit Filed Against Elon Musk by SEC Over Twitter Stake Disclosure

The SEC identifies potential violations in Musk's Twitter stake acquisition, seeking financial penalties and highlighting past clashes between the influential figure and the agency.

The U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against Elon Musk, alleging that the billionaire entrepreneur neglected to disclose his substantial acquisition of Twitter shares in a timely manner. This oversight is said to have enabled Musk to purchase shares at "artificially low prices," allegedly saving him approximately $150 million at the expense of Twitter shareholders. According to SEC regulations, any investor accumulating more than 5% holdings is required to report this within ten days; however, Musk reportedly informed the agency 21 days post-purchase.

In a social media statement, Musk criticized the SEC, referring to it as a "totally broken organization" and asserting that the regulator is squandering resources when they should be addressing more pressing crimes. The SEC's complaint indicates that Musk’s alleged late disclosure resulted in notable economic detriment to other investors. His legal representative, Alex Spiro, dismissed the lawsuit as a "sham" and described it as a relentless campaign targeting Musk.

The lawsuit was filed in a Washington, D.C. federal court and seeks to reclaim what the SEC deems "unjust profits" Musk made and to impose a financial penalty on him. The agency further noted that following Musk's public revelation of his stake in Twitter on April 4, 2022, the company's share price experienced a surge of over 27%. This acquisition eventually led to Musk purchasing Twitter outright for $44 billion in October 2022, after which he renamed the platform to X.

Within the context of the SEC’s current movements, it is worth noting that the agency's chair, Gary Gensler, announced his impending resignation scheduled for January 20, coinciding with Donald Trump's expected return to the White House. Trump had previously suggested he would dismiss Gensler on his first day back in power. Tensions between Musk and the SEC have been apparent for years; in 2018, Musk faced allegations of deceiving investors by claiming he had secured funding for Tesla's privatization, ultimately concluding that matter with a settlement.