Elon Musk Faces SEC Lawsuit Over Late Twitter Stake Disclosure

Image Credit: Reuters

Elon Musk was sued by the U.S. Securities and Exchange Commission (SEC) on Tuesday, accusing him of delaying the disclosure of his significant stake in Twitter in 2022, which he eventually purchased.

The SEC's complaint, filed in federal court in Washington, D.C., alleges Musk violated federal securities laws by failing to report his initial 5% ownership of Twitter within the required 10-day window. Musk’s disclosure, which came 11 days late, was due by March 24, 2022, but he waited until April 4, 2022, by which point he owned 9.2% of the company.

The SEC claims that Musk's delay allowed him to purchase more than $500 million worth of Twitter shares at lower prices, benefiting from the delay as the stock price surged more than 27% following the official announcement of his holdings.

The lawsuit seeks a civil penalty against Musk and demands that he repay any unwarranted profits. Musk went on to acquire Twitter for $44 billion in October 2022 and rebranded it as X.

Musk’s attorney, Alex Spiro, dismissed the lawsuit as part of a "multi-year campaign of harassment" by the SEC. He argued that the lawsuit stemmed from a minor administrative issue and emphasized that Musk did nothing wrong.

Musk, who is worth $417 billion according to Forbes, is also facing a lawsuit from former Twitter shareholders over the delayed disclosure. In that case, Musk has claimed the delay was unintentional and not aimed at defrauding shareholders.

Musk has had a long-running conflict with the SEC, dating back to 2018 when the agency sued him over misleading tweets about taking Tesla private. Musk settled that case by paying a $20 million fine and agreeing to pre-approve certain social media posts.

Paraphrasing text from "Reuters" all rights reserved by the original author.