Update (Jan. 15, 1:40 am UTC): This article has been updated to add more information from the SEC’s filing and a response from Elon Musk’s lawyer.
The US Securities and Exchange Commission has sued Elon Musk, saying the world’s richest man failed to disclose “he had acquired beneficial ownership” of Twitter in early 2022, allowing him to purchase shares at lower prices.
The SEC said in a Jan. 14 filing in a Washington, DC, federal court that Musk’s alleged late disclosure of his Twitter (now X) stake allowed him to “continue purchasing shares at artificially low prices” and “underpay by at least $150 million for shares he purchased after his beneficial ownership report was due.”
The SEC alleged Musk failed to file a report disclosing his Twitter holdings within the required 10 days after he owned more than 5% of the company’s stock, doing so 11 days after the report was due — on April 4, 2022.
“That day, Twitter’s stock price increased more than 27% over its previous day’s closing price,” the SEC said.
The lawsuit comes just days before the SEC is expected to change leadership, with Chair Gary Gensler to step down on Jan. 20 as Donald Trump takes office. Musk is slated to advise the incoming president on government efficiency matters.
The SEC said Musk started purchasing Twitter stock in early 2022 and owned over 5% of Twitter’s outstanding common stock by March 14 of that year.
It alleged Musk spent over $500 million buying Twitter common shares in which he “underpaid Twitter investors by more than $150 million” between March 24 and April 4, 2022.
“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership,” it added.
In a Jan. 15 X post in response to the suit, Musk called the SEC a “totally broken organization” and added: “They spend their time on shit like this when there are so many actual crimes that go unpunished.”
Source: Elon Musk
Musk’s lawyer, Alex Spiro, told Cointelegraph that “the SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk.”
”Today’s action is an admission by the SEC that they cannot bring an actual case,” he added. “Mr. Musk has done nothing wrong and Everyone sees this sham for what it is.”
Related: US gov’t job could allow Elon Musk to defer capital gains tax
Musk, the world’s richest man, bought Twitter for $44 billion on April 25, 2022, and then took the microblogging platform private, renamed it X, and fired its top executives along with half its employees before gutting its misinformation content policies, which subjected it to regulatory scrutiny in multiple regions including Europe and Australia.
The SEC is seeking a jury trial and for Musk to pay “disgorgement of his unjust enrichment” alongside a civil penalty.
X Hall of Flame: Elon Musk is worth 100K followers — Yat Siu
The US Securities and Exchange Commission has sued Elon Musk, saying the world’s richest man failed to disclose “he had acquired beneficial ownership” of Twitter in early 2022, allowing him to purchase shares at lower prices.
The SEC said in a Jan. 14 filing in a Washington, DC, federal court that Musk’s alleged late disclosure of his Twitter (now X) stake allowed him to “continue purchasing shares at artificially low prices” and “underpay by at least $150 million for shares he purchased after his beneficial ownership report was due.”
The SEC alleged Musk failed to file a report disclosing his Twitter holdings within the required 10 days after he owned more than 5% of the company’s stock, doing so 11 days after the report was due — on April 4, 2022.
“That day, Twitter’s stock price increased more than 27% over its previous day’s closing price,” the SEC said.
The lawsuit comes just days before the SEC is expected to change leadership, with Chair Gary Gensler to step down on Jan. 20 as Donald Trump takes office. Musk is slated to advise the incoming president on government efficiency matters.
The SEC said Musk started purchasing Twitter stock in early 2022 and owned over 5% of Twitter’s outstanding common stock by March 14 of that year.
It alleged Musk spent over $500 million buying Twitter common shares in which he “underpaid Twitter investors by more than $150 million” between March 24 and April 4, 2022.
“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership,” it added.
In a Jan. 15 X post in response to the suit, Musk called the SEC a “totally broken organization” and added: “They spend their time on shit like this when there are so many actual crimes that go unpunished.”
Source: Elon Musk
Musk’s lawyer, Alex Spiro, told Cointelegraph that “the SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk.”
”Today’s action is an admission by the SEC that they cannot bring an actual case,” he added. “Mr. Musk has done nothing wrong and Everyone sees this sham for what it is.”
Related: US gov’t job could allow Elon Musk to defer capital gains tax
Musk, the world’s richest man, bought Twitter for $44 billion on April 25, 2022, and then took the microblogging platform private, renamed it to X, fired its top executives along with half its employees before gutting its misinformation content policies, which subjected it to regulatory scrutiny in multiple regions including Europe and Australia.
The SEC is seeking a jury trial and for Musk to pay “disgorgement of his unjust enrichment” alongside a civil penalty.
X Hall of Flame: Elon Musk is worth 100K followers — Yat Siu