The Securities and Exchange Commission (SEC) sued Elon Musk, alleging that the billionaire failed to disclose his ownership of Twitter stock in a timely manner in early 2022, prior to his acquisition of the social media platform.
In its suit filed late Tuesday (local time) in Washington’s US district court, the SEC claims that as a result of this delay, Musk was able to purchase shares at a lower price, underpaying by at least $150 million, reported the Associated Press.
According to the complaint, Musk began accumulating Twitter shares in early 2022 and by March, he owned more than 5 per cent of the company’s stock. At this point, he was legally required to disclose his ownership but failed to do so until April 4, 11 days after the deadline.
One of Elon Musk’s attorney, Alex Spiro, gave a statement to Bloomberg, characterising the SEC’s legal action as “an admission” of their weak position. Spiro defended his client, stating that “has done nothing wrong and everyone sees this sham for what it is”.
Twitter was acquired by Musk in April 2022 and later renamed to X the next year. After signing a deal to acquire the platform, Musk attempted to back out of the agreement, prompting the company to sue him to enforce the acquisition.
The SEC has stated that starting in April 2022, it had authorised an investigation into potential violations of securities laws related to Musk’s purchases of Twitter stock and his statements and filings with the SEC concerning the company.
Prior to filing the lawsuit, the SEC sought a court order to compel Musk to testify as part of the investigation into his acquisition of Twitter.
The current SEC chair Gary Gensler is set to step down from his position on January 20, and it remains uncertain whether the new administration will pursue the lawsuit.