The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing the billionaire of failing to disclose his acquisition of a significant stake in Twitter on time. The SEC claims this delay allowed Musk to purchase shares at artificially low prices, allegedly saving him $150 million in the process.
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Violation of SEC Rules by Elon Musk
Under SEC regulations, investors who acquire more than 5% of a company’s shares are required to disclose their holdings within ten days. According to the lawsuit, Musk surpassed this threshold but waited 21 days to make the disclosure. This delay is said to have caused “substantial economic harm to investors,” the SEC stated in its complaint.
Musk’s Response
Musk, who has a history of clashing with the SEC, dismissed the lawsuit as a “sham” in a statement through his lawyer, Alex Spiro. He also criticized the regulator on social media, calling it a “totally broken organization” and accusing it of focusing on him while neglecting more significant issues.
Impact on Twitter and Musk’s Role
When Musk finally disclosed his stake in Twitter on April 4, 2022, the company’s share price surged by over 27%. Later that year, he acquired Twitter for $44 billion and rebranded it as X.
The SEC’s lawsuit, filed in a federal court in Washington, D.C., seeks to recover Musk’s alleged “unjust profits” and impose financial penalties. This legal battle is the latest in a series of disputes between Musk and the SEC, which have included charges of fraud in 2018 over his claims of securing funding to take Tesla private.
Leadership Changes and Political Connections
The lawsuit also comes amid speculation surrounding SEC head Gary Gensler’s future. Gensler has announced plans to resign if Donald Trump returns to the presidency in January, following Trump’s stated intention to remove him from office. Musk, a close ally of Trump, has had numerous conflicts with the SEC, both under Gensler’s leadership and before.
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