- The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, CEO of Tesla (NASDAQ:TSLA) and SpaceX, alleging that he failed to properly disclose his ownership of Twitter, now known as X, as required by federal law.
- Musk began acquiring a significant number of Twitter shares before closing his US$44 billion deal to buy the company in October 2022. By mid-March 2022, Musk owned more than 5 per cent of Twitter’s common stock, a threshold that required him to disclose his holdings to the SEC
- The SEC claims that this delay in disclosure allowed Musk to underpay by at least US$150 million for shares he purchased after his financial beneficial ownership report was due
- The SEC has been investigating Musk’s acquisition of the social media platform, and in December, Musk disclosed on social media that the agency had demanded he pay a fine of an undisclosed amount to settle charges over his purchases of Twitter shares
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, CEO of Tesla (NASDAQ:TSLA) and SpaceX, alleging that he failed to properly disclose his ownership of Twitter, now known as X, as required by federal law. This move is said to have allowed Musk to purchase shares of the platform at “artificially low prices.”
According to the SEC’s civil complaint, filed in U.S. District Court in Washington, D.C., Musk began acquiring a significant number of Twitter shares before closing his US$44 billion deal to buy the company in October 2022. By mid-March 2022, Musk owned more than 5 per cent of Twitter’s common stock, a threshold that required him to disclose his holdings to the SEC within 10 calendar days. However, the filing alleges that Musk did not disclose this information until April 4, 2022, more than 10 days late.
The SEC claims that this delay in disclosure allowed Musk to underpay by at least US$150 million for shares he purchased after his financial beneficial ownership report was due. Investors, unaware of Musk’s growing interest in the company, may have bid up the stock had they known about his purchases.
In a statement to CNN, Musk’s lawyer, Alex Spiro, defended his client, stating, “Musk has done nothing wrong” and describing the lawsuit as “an admission by the SEC that they cannot bring an actual case.” Spiro further criticized the SEC’s actions as a “multi-year campaign of harassment” against Musk, culminating in a “single-count ticky-tack complaint” for an alleged administrative failure to file a single form.
The complaint details that by March 24, 2022, Musk had increased his stake in Twitter to more than 7 per cent. The following day, he purchased almost 3.5 million shares and expressed interest in acquiring the company to members of Twitter’s board of directors.
The SEC has been investigating Musk’s acquisition of the social media platform, and in December, Musk disclosed on social media that the agency had demanded he pay a fine of an undisclosed amount to settle charges over his purchases of Twitter shares.
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