The SEC filed a lawsuit against Elon Musk on Tuesday, revealing the billionaire’s ownership of active shares in Twitter Inc. in 2022, a secret that will allow him to buy shares at “artificially low prices.” He claimed that he committed securities fraud by failing to do so.
Musk, who is also the CEO of Tesla and SpaceX, bought Twitter for $44 billion and later changed the social network’s name to X. Prior to the acquisition, he held a position of more than 5% within the company. He demanded that his assets be disclosed to the public.
According to the SEC’s civil complaint filed in U.S. District Court in Washington, D.C., Musk withheld that critical information, resulting in “at least 150 million yen for shares purchased after the filing deadline for financial ownership reports.” “They were allowed to underpay the dollar amount.”
The SEC said Musk or others working with him may have committed securities fraud in 2022 after Tesla’s CEO sold shares in the car company and bought more shares in Twitter ahead of a leveraged buyout. They were investigating whether he had committed a crime. Last month, Musk wrote in a post to He said he had called.
Musk’s lawyer, Alex Spiro, said in an emailed statement that the lawsuit is an admission by the SEC that “no real case can be filed.” He added that Musk “did nothing wrong” and that the lawsuit was a “sham” and the result of a “year-long campaign of harassment” that led to “single-count prickly accusations.” said.
With President-elect Donald Trump’s second term beginning on January 20, Musk is one week away from assuming a potentially influential role within the government. Musk, who was a major financial supporter of Trump in the later stages of the campaign, is poised to play such a role. He will lead an advisory group focused in part on reducing regulations, including those affecting Mr. Musk’s various companies.
President Trump announced in July that he would fire SEC Chairman Gary Gensler. After Trump won the election, Gensler announced he would step down in his place.
In a separate civil suit related to his dealings with Twitter, the Oklahoma State Firefighters Pension and Retirement System sued Musk, accusing him of intentionally concealing his advanced investments in the social network and his intentions to acquire the company. . Lawyers for the pension fund argued that by not clearly disclosing his investments, Musk influenced the decisions of other shareholders and put them at a disadvantage.
The SEC said Musk exceeded the 5% ownership threshold in March 2022 and had until March 24 to disclose his holdings.
“On April 4, 2022, 11 days after the report filing deadline, Mr. Musk finally disclosed his beneficial ownership in an SEC filing, stating that he had acquired more than 9 percent of Twitter’s outstanding shares,” the complaint states. It is said that the “On that day, Twitter’s stock price rose more than 27% compared to the previous day’s closing price.”
The SEC alleges that Musk spent more than $500 million buying additional Twitter stock between the required disclosure and the actual filing date. This allowed him to purchase stock “at artificially low prices from the unsuspecting public,” the complaint says. The SEC said he paid more than $150 million in “undercompensation” to Twitter shareholders during the same period.
In its complaint, the SEC seeks a jury trial and forces Musk to “pay disgorgement of unjust enrichment” as well as civil penalties.
For a brief period in April 2022, Musk was scheduled to join Twitter’s board of directors after his ownership was made public and he was known to be the company’s largest shareholder. However, he quickly abandoned that plan and informed the board that he would not take a seat.
What followed was a six-month drama that began when Musk submitted an unsolicited bid in mid-April, but the board opposed it. Twitter’s board ultimately accepted Musk’s proposal later that month. Shortly after, Musk tried to backtrack, claiming Twitter was misrepresenting the number of “bots” on the service.
Musk ultimately signed the deal in October 2022, famously walking into the company’s offices in San Francisco with a sink in hand.
“Entering Twitter HQ – let’s figure it out!” Musk wrote, attaching a video of his entrance.
This story is developing.
