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US securities regulators have sued Elon Musk for allegedly failing to make timely disclosures about Twitter stock purchases in 2022, helping him get a discount of at least $150 million on his purchases additional stock.
The Securities and Exchange Commission accused Musk, one of President-elect Donald Trump’s closest allies, of failing to disclose an ownership of more than 5 percent of Twitter on time, in violation of US securities law .
Regulators alleged in a civil lawsuit filed in Washington federal court on Tuesday that Musk bought more than 5 percent of Twitter’s stock by March 14, 2022, but he did not publicly disclose his ownership until April 4 – 11 days after it was made reportable. On the day his stock was reported, Twitter shares rose more than 27 percent, the SEC said.
“Musk was able to continue buying shares at artificially low prices, allowing him to underpay by at least $150 million for the shares he bought after his beneficial ownership ratio was due,” the regulator alleged. in the complaint.
The alleged violation of securities law came as Musk was fine-tuning his acquisition of Twitter, a deal that closed for $44 billion in October 2022. He has since rebranded the social media site X.
The lawsuit marks the latest broadside by the SEC against the world’s richest man. The agency charged Musk in 2018 with securities fraud in a separate case related to online posts about his electric car maker Tesla. Musk later settled with the SEC, but is at odds with the regulator over the terms of that settlement.
Tuesday’s complaint is one of the last enforcement actions led by SEC Chairman Gary Gensler before he steps down on Jan. 20, the day Trump is inaugurated as president.
Alex Spiro, a lawyer for Musk, said: “As the SEC backs down and steps down — the SEC’s years-long campaign of harassment against Mr. Musk culminated in the filing of a single, irregular complaint. . . an offense which, even if proven, carries a nominal penalty.”
Spiro added: “Today’s action is an admission by the SEC that . . . they can’t make a real case — because Mr. Musk has done nothing wrong and everyone sees this fraud for what it is.”
The regulator began its investigation into the share purchases in April 2022, according to regulatory filings. That month, the SEC sent a letter to Musk asking him why he failed to file by a March deadline and why he had initially indicated he would be a passive investor.
