The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing the billionaire of failing to promptly disclose his acquisition of a stake in Twitter in 2022.
The delay in disclosure allegedly allowed Musk to buy Twitter shares at prices lower than they might otherwise have been.
According to the SEC, Elon Musk began purchasing Twitter stock in March 2022, surpassing the 5% ownership threshold on March 14. However, he only disclosed this to regulators on April 4, 11 days later than the legal deadline. U.S. law requires investors to notify regulators within ten days of crossing this threshold, a measure designed to ensure market transparency.
By delaying the announcement, the SEC claims Musk gained an unfair advantage, continuing to buy Twitter shares at undervalued prices. His eventual disclosure caused Twitter’s stock price to surge by more than 27%, leaving earlier sellers at a disadvantage. The regulator estimates Musk underpaid by at least $150 million for shares purchased during this period.
The lawsuit seeks to impose a civil fine on Musk and recover profits made from the delayed disclosure. Musk’s legal team, however, has dismissed the case as baseless. His lawyer, Alex Spiro, described the lawsuit as a “harassment campaign” and downplayed the allegations, calling them an administrative oversight related to filing a single form.
This is not Elon Musk’s first clash with the SEC. In 2018, Musk was involved in a case about a Twitter post claiming he had secured funding to take Tesla private. That case was settled with a $20 million fine and conditions requiring Musk to have certain tweets pre-approved by Tesla lawyers.
Musk went on to acquire Twitter, now rebranded as X, for $44 billion in October 2022. But even with the current lawsuit, he is still an influential figure in the business world, with interests spanning Tesla, SpaceX, and other ventures.
