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- US SEC said that Elon Musk bought shares at artificially low prices and underpaid investors by over $150 million during the 2022 acquisition.
- The SEC claims Musk failed to disclose his beneficial ownership of more than 5% of Twitter shares until 11 days after the legal deadline.
The US Securities and Exchange Commission (SEC) filed a fresh lawsuit against Tesla chief Elon Musk over the alleged securities law violations during the Twitter acquisition back in 2022. Also, the securities agency alleged that Musk failed to disclose “he had acquired beneficial ownership” of Twitter which allowed him to buy the stock at a lower rate.
The SEC lawsuit mentions that Elon Musk had acquired more than 5% of Twitter stock in 2022; however, he failed to report his holdings within 10 days as per the federal regulatory requirements. In its filing, the SEC noted that Musk’s alleged late disclosure of his Twitter stock 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.”
SEC Accuses Elon Musk of Failing on Key Disclosure
As per the filing, Musk submitted his disclosure of owning Twitter stock 11 days late, 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 US SEC accused Elon Musk of spending over $500 million on Twitter common shares while allegedly underpaying investors by more than $150 million during the period between March 24 and April 4, 2022. The regulator wrote:
“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”.
Interestingly, this lawsuit from the SEC comes just days before Chairman Gary Gensler will step down, making way for Paul Atkins who is likely to take charge following Donald Trump’s inauguration on January 20, as discussed earlier in a CNF report.
Musk Slams SEC as “Totally Broken” Amid Legal Dispute
Elon Musk criticized the U.S. Securities and Exchange Commission (SEC) on January 15, labeling it a “totally broken organization” in response to the regulator’s recent lawsuit against him. In a post on X (formerly Twitter), Musk stated, “They spend their time on stuff like this when there are so many actual crimes that go unpunished.”
Furthermore, Musk’s lawyer, Alex Spiro, has called the SEC’s actions as a “multi-year campaign of harassment”. He further stated that the complaint was “a single-count ticky-tack complaint” that capped years of SEC scrutiny targeting Musk.
Ever since Musk acquired Twitter in a $4 billion deal back in April 2022, he has brought some key changes to the organization. He renamed a microblogging platform X and introduced paid verification in order to push the firm toward profitability. This year, X (formerly Twitter) will introduce X Money, a new payment system aimed at transforming the app into an all-in-one digital hub, as previously reported by CNF.
