In 2022, a Twitter shareholder sued him over similar allegations. That lawsuit is currently ongoing.
Billionaire entrepreneur Elon Musk has been sued by the US Securities and Exchange Commission (SEC) over allegations that he failed to disclose his acquisition of Twitter – now X – in a timely manner, saving him at least $150m at the expense of shareholders.
In the complaint filed on 14 January with the District Court of Columbia, the SEC alleges that Musk did not file a ‘beneficial ownership report’ disclosing his more than 5pc acquisition of Twitter on time, in violation of the Securities Exchange Act.
According to the complaint, Musk acquired ownership of more than 5pc of Twitter’s stocks by 14 March 2022, an ownership he was required to file with the SEC by 24 March, informing the public of his purchase. However, Musk filed the report 11 days after it was due, disclosing to the public on 4 April that he had acquired more than 9pc of the company’s stocks. That day, the SEC said, the company’s stocks rose by more than 27pc.
The SEC alleges that during the period that Musk did not disclose his purchase, he bought more than $500m worth of additional stocks in Twitter from “unsuspecting public” at “artificially low prices”, underpaying the company’s investors by more than $150m.
The SEC is seeking penalties from Musk and is requesting the Court to order him to pay “disgorgement of his unjust enrichment”.
Responding to an X post discussing the SEC’s lawsuit, Musk said that the Commission spends their time on “shit like this when there are so many actual crimes that go unpunished”.
While in a statement to various media outlets, Musk’s attorney Alex Spiro called the complaint a “sham”. He said that the lawsuit “is an admission by the SEC that they cannot bring an actual case” since Musk has “done nothing wrong”.
He added: “As the SEC retreats and leaves office – the SEC’s multi-year campaign of harassment against Mr Musk culminated in the filing of a single-count ticky-tack complaint against Mr Musk under Section 13(d) for an alleged administrative failure to file a single form – an offense that, even if proven, carries a nominal penalty”.
Musk was sued by a Twitter shareholder in April 2022 for failing to notify the SEC of his considerable ownership of stakes in the company, an allegation the SEC is now suing him for. That lawsuit is still ongoing.
While in July of the same year, Musk was sued by Twitter for trying to terminate his deal to acquire the company for $44bn. Months later, in October, he completed the social media platform’s purchase.
In 2023, the SEC filed a subpoena enforcement action against Musk to force him to testify in an investigation of his Twitter takeover, alleging that he potentially violated various provisions of the federal securities laws.
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