The SEC has filed a lawsuit against billionaire Elon Musk, accusing him of violating securities law by failing to disclose his active stake in Twitter, which allowed him to purchase shares at “artificially low prices.”
CNBC reports that in a civil complaint filed on Tuesday in the U.S. District Court in Washington, D.C., the SEC alleges that Elon Musk committed securities fraud in 2022 by not disclosing his ownership of more than five percent of Twitter shares within the required 10 calendar days of reaching that threshold. This lack of transparency, according to the SEC, enabled Musk to underpay for Twitter shares by at least $150 million.
Musk, who is also the CEO of Tesla and SpaceX, acquired Twitter for $44 billion in late 2022 and subsequently changed the company’s name to X the following year. The SEC’s complaint states that Musk was more than 10 days late in reporting his material ownership information, which may have influenced investors to bid up the stock had they been aware of his purchases and interest in the company.
Musk’s lawyer, Alex Spiro, has called the SEC’s action a “sham” and the result of a “multi-year campaign of harassment.” Spiro, a partner at Quinn Emanuel, stated that Musk “has done nothing wrong” and referred to the suit as a “single-count ticky tak complaint.”
The SEC’s lawsuit comes just a week before President-elect Donald Trump’s second term begins, with Musk poised to lead an advisory group for the Trump administration. Trump, who received significant financial backing from Musk during the latter stages of his campaign, has vowed to fire current SEC chairman Gary Gensler. Following Trump’s election victory, Gensler announced his resignation, and Trump plans to nominate Paul Atkins as the next chair of the SEC.
This is not the first time Musk has faced legal issues related to his Twitter acquisition. In a separate civil lawsuit filed in 2022, the Oklahoma Firefighters Pension and Retirement System accused Musk of deliberately concealing his progressive investments in Twitter and his intent to buy the company, putting other shareholders at a disadvantage.
The SEC’s complaint seeks a jury trial and asks that Musk be forced to “pay disgorgement of his unjust enrichment” as well as a civil penalty. This latest development is part of an ongoing saga that began in April 2022, when Musk’s ownership stake in Twitter became public knowledge, and he briefly considered joining the company’s board before abandoning the plan.
Musk has had previous run-ins with the SEC, including a 2018 charge of making “false and misleading” statements to investors when he infamously announced via Twitter that he was considering taking Tesla private at $420 a share. The matter was eventually settled, with Musk and Tesla each paying $20 million in fines and Musk temporarily relinquishing his role as chairman of the Tesla board.
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
