Washington, Jan. 14 — The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against tech billionaire Elon Musk, alleging that he failed to disclose his acquisition of Twitter shares within the legally mandated timeline. The suit, filed in federal court, accuses Musk of delaying his disclosure and causing substantial economic harm to investors.
The Allegations
The SEC’s complaint centers on Musk’s purchase of over 5 percent of Twitter’s common stock in early 2022. Federal securities laws require investors who acquire more than 5 percent of a company’s stock to publicly disclose their holdings within 10 days. However, Musk reportedly delayed this disclosure by 11 days, waiting until April 4, 2022, to file the required paperwork.
By the time Musk disclosed his holdings, he had acquired approximately 9 percent of Twitter shares. Following his disclosure, Twitter’s stock price surged by 27 percent, boosting the value of his stake.
The SEC claims this delay allowed Musk to save at least $150 million on subsequent stock purchases made before the disclosure. The agency’s lawsuit asserts that investors who sold their shares during this period were misled by the artificially low stock prices and suffered significant losses.
The SEC’s Demands
The SEC is seeking a civil fine against Musk and a court order requiring him to disgorge any profits he gained from the delayed disclosure.
“Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm,” the SEC’s complaint states.
Musk’s Response
Musk’s attorney, Alex Spiro, dismissed the SEC’s lawsuit as baseless. In a statement to The Epoch Times, Spiro described the case as a “sham” and accused the SEC of engaging in a “multi-year campaign of harassment” against Musk.
“Today’s action is an admission by the SEC that they cannot bring an actual case,” Spiro said, maintaining that Musk’s actions were lawful. He argued that the alleged infraction typically carries only a nominal penalty.
Musk’s History with the SEC
This lawsuit is the latest in a series of legal battles between Musk and the SEC. The agency has scrutinized Musk’s behavior in the past, most notably in 2018 when it sued him for tweeting that he had “funding secured” to take Tesla private at $420 per share.
The SEC claimed the statement was misleading and caused Tesla’s stock price to rise by over 6 percent, disrupting the market. Musk settled the case, agreeing to pay a $20 million fine and step down as Tesla’s chairman for three years, though he did not admit wrongdoing.
Other Legal Challenges
Musk’s “funding secured” tweet also led to a separate lawsuit from Tesla investors, who alleged that the statement caused them $12 billion in financial losses. During the trial, Musk’s attorneys argued that he genuinely believed in the statement, citing discussions with Saudi Arabia’s Public Investment Fund as evidence of potential funding.
In February 2023, a jury unanimously cleared Musk of liability in the case. An appellate court later upheld the jury’s decision, further vindicating Musk.
SEC Leadership Transition
The lawsuit against Musk comes as SEC Chair Gary Gensler prepares to step down on Jan. 20, coinciding with the inauguration of President-elect Donald Trump for his second term. Gensler’s tenure has been marked by heightened scrutiny of high-profile figures in the financial and tech sectors, including Musk.
What’s Next?
The legal battle between the SEC and Musk is poised to be a major test of securities law enforcement and its applicability to high-profile executives. The court’s decision could set a precedent for how disclosure violations are handled in the future.
Stay tuned for updates on this developing story.
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