US Markets Regulator Sues Elon Musk Over Delayed Twitter Stake Disclosure
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of failing to disclose his significant stake in Twitter within the required timeframe. The regulator alleges that Musk’s actions allowed him to purchase shares at “artificially low prices,” saving him an estimated $150 million (£123 million).
According to SEC regulations, investors who acquire over 5% of a company’s shares must report this within 10 days. The lawsuit claims Musk waited 21 days to disclose his holdings after surpassing the threshold.
In response, Musk dismissed the SEC as a “totally broken organization” in a social media post. He criticized the regulator for focusing on him instead of addressing “actual crimes” that go unpunished.
The SEC contends that Musk’s delay caused significant financial harm to other investors. The complaint also noted that Twitter’s share price surged over 27% on April 4, 2022, the day Musk publicly revealed his purchase.
The lawsuit, filed in a federal court in Washington, D.C., seeks to recover Musk’s alleged “unjust” profits and impose a fine.
Alex Spiro, Musk’s attorney, described the case as a “sham” and part of a “campaign of harassment” targeting his client.
Musk’s relationship with the SEC has been contentious for years. In 2018, the regulator accused him of misleading investors with claims of having “funding secured” to take Tesla private. Musk settled the case by stepping down as Tesla’s board chairman and agreeing to limits on his social media posts about the company.
This latest lawsuit comes against the backdrop of Musk’s $44 billion acquisition of Twitter in October 2022, after which he rebranded the platform as “X.”
The SEC, led by Gary Gensler, has had a rocky relationship with Musk. Gensler recently announced his plans to step down as SEC head when Donald Trump, who has pledged to fire him, takes office in January 2025. The political tension further highlights the SEC’s strained dealings with Musk, a known ally of the incoming president.
