Elon Musk Sued: SEC Accuses Him of Violating Twitter Share Disclosure
Date: 2025-01-15 Author: Oliver Abernathy Categories: BUSINESS
The SEC filed the lawsuit in federal court in the District of Columbia on Jan. 14, alleging that Musk acquired a significant stake in Twitter but failed to report it in a timely manner, allowing him to buy shares at a discount. The SEC alleges that the violation cost Musk at least $150 million in stock purchases that he made after he was required to file a report of his ownership.
Under SEC rules, investors are required to disclose ownership of more than 5% of a company’s shares within 10 days. Musk, according to the commission, did not do so on time and submitted the report only on April 4, 2022, 11 days after the deadline. On the same day, the price of Twitter shares rose by more than 27%.
The lawsuit was filed several days before the change in the leadership of the SEC: the commission's chairman Gary Gensler is preparing to step down on January 20. Meanwhile, Musk is scheduled to take up a position as an adviser to the new US president on improving the effectiveness of government.
The SEC alleges that Musk began buying Twitter shares in early 2022 and owned more than 5% of their total stock by March 14. Between March 24 and April 4, he spent more than $500 million to acquire shares of the company, while, according to the commission, he paid investors $150 million less than the shares would have been worth had he timely disclosed his stake.
“Because Musk failed to promptly disclose his ownership, he was able to continue buying shares at artificially low prices that did not reflect meaningful information about his stake,” the SEC said.
In response to the lawsuit, Musk posted a message on X on January 15, calling the SEC a “totally failed organization.” He added, “They waste their time on cases like this while real crimes go unpunished.”
Musk’s attorney, Alex Spiro, called the SEC’s actions a “year-long campaign of harassment” and described the lawsuit as a “blatant accusation.” “This is an admission by the SEC that they are unable to bring a real lawsuit,” he said.
Elon Musk, who bought Twitter for $44 billion on April 25, 2022, took the company public, renamed it X, fired its management and many of its employees, and relaxed its anti-disinformation policies, prompting regulatory pressure in places like Europe and Australia.
The SEC is seeking a jury trial, forfeiture of Musk’s proceeds from the violation, and a civil penalty.
