SEC Sues Elon Musk for Delayed Disclosure of Twitter Purchase
The SEC has sued Elon Musk, alleging he failed to disclose a major Twitter stock purchase within the required timeframe.
The U.S. Securities and Exchange Commission (SEC) has sued Elon Musk, accusing him of failing to disclose his purchase of Twitter shares within the legally mandated timeline.
The lawsuit, filed in federal court in Washington on Jan. 14, centers on Musk’s acquisition of more than 5 percent of Twitter’s common stock in early 2022, a transaction that was not publicly disclosed until weeks later. Federal securities law requires investors who acquire more than 5 percent of a company’s stock to file a disclosure with the SEC within 10 days.
The SEC alleges in the complaint that by filing the disclosure 11 days past the mandated deadline, Musk was able to underpay by at least $150 million for subsequent tranches of stock that he bought before filing the required disclosure on April 4, 2022.
The agency noted in the complaint that Twitter shares surged in price by 27 percent after Musk filed the required disclosure and, by that time, he already owned 9 percent of the social media giant’s shares.
“Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm,” the complaint states.
The SEC wants the court to impose a civil fine on Musk and to force him to disgorge any profits that he incurred due to the late filing.
Musk’s attorney, Alex Spiro, told The Epoch Times in an emailed statement that his client did nothing wrong and labeled the SEC’s lawsuit as a “sham.”
“Today’s action is an admission by the SEC that they cannot bring an actual case,” Spiro wrote, adding that Musk “has done nothing wrong and everyone sees this sham for what it is.”
The lawsuit is the latest chapter in Musk’s contentious relationship with the SEC. In 2018, the agency sued him for posting on social media that he had “funding secured” to take Tesla private at $420 per share, a claim that was later revealed to be exaggerated. The SEC contended that Musk’s “misleading” post caused Tesla’s stock price to jump by over 6 percent and led to “significant market disruption.” That case was settled with Musk agreeing to pay a $20 million fine and step down as Tesla’s chairman for three years. The settlement did not require Musk to admit to any wrongdoing.
Musk’s “funding secured” post also sparked another lawsuit by a group of Tesla investors, who claimed that it was materially misleading and led them to suffer as much as $12 billion in financial losses. During a three-week trial in the case, Musk’s attorneys argued that he believed his statements about taking Tesla private were truthful, citing discussions with Saudi Arabia’s Public Investment Fund (PIF) as evidence of potential funding. Musk testified that PIF representatives showed strong interest in the deal, which led him to claim that the funding was secured.
“I had no ill motive,” Musk said in court. “My intent was to do the right thing for all shareholders.”
The jury sided with Musk in the case. Jurors delivered a unanimous verdict in February 2023, finding that Musk and Tesla were not liable for misleading investors with the posts. The investors appealed the decision, arguing that the judge gave erroneous instructions to the jurors. The appellate court upheld the jury’s decision, clearing Musk of securities fraud.
The SEC’s current chair, Gary Gensler, plans to step down from his post on Jan. 20, the day President-elect Donald Trump will be inaugurated for a second term.
