The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of violating securities laws in his acquisition of Twitter shares. The SEC alleges that Musk failed to properly disclose his active stake in the social media company, a move that allowed him to purchase shares at “artificially low prices.”
Musk, the CEO of Tesla and SpaceX, acquired Twitter for $44 billion in 2022, later renaming it X. However, the SEC claims that Musk had already accumulated a significant stake of over 5% in the company before making the acquisition offer. This ownership threshold would have required Musk to file a public disclosure within 10 calendar days, which he failed to do.
According to the SEC’s complaint, filed in the U.S. District Court in Washington, D.C., Musk was more than 10 days late in reporting his holdings, allowing him to purchase additional shares at a discounted price, thereby underpaying by at least $150 million. Had investors been aware of Musk’s substantial stake, they might have driven up the stock price, impacting his ability to purchase shares at a lower cost.
In response, Musk’s attorney, Alex Spiro, stated that the SEC’s actions are an admission of their inability to substantiate a case, calling the lawsuit “a sham” and a product of years of “harassment.” Musk, in his defense, maintains that he has committed no wrongdoing.
This lawsuit is the latest in a series of legal challenges Musk faces over his Twitter dealings. Musk’s acquisition of the company was preceded by a dramatic sequence of events, including an initial reluctance to join Twitter’s board and a failed attempt to back out of the deal.
The SEC is seeking a jury trial, requesting that Musk be required to “pay disgorgement of his unjust enrichment” as well as a civil penalty.
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