SEC lawsuit claims Musk gained over $150 million by delaying disclosure of Twitter shares
After a more than two-year investigation, the Securities and Exchange Commission has sued Elon Musk above his delayed disclosure of Twitter shares he had accumulated before announcing his intention to take over the company in 2022.
In a court filing, the SEC says Musk filed documents with the SEC disclosing his purchase of Twitter shares 11 days after an SEC-mandated deadline. (Federal law, as the SEC notes in its statement, requires investors to publicly report when they have acquired a stake of more than 5 percent in a company.) That delay, the regulator said, allowed Musk to do even more Buying up Twitter shares at a time when other investors were unaware of his involvement in the company.
Out of the lawsuit:
While Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $500 million to purchase additional shares of Twitter common stock. Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices that did not yet reflect the undisclosed material information about Musk’s beneficial ownership of more than five percent of Twitter’s common stock and investments . In total, Musk underpaid Twitter investors more than $150 million for his purchases of Twitter common stock during that period. Investors who sold Twitter common stock during this period did so at artificially low prices and suffered significant economic harm as a result.
The regulator has been investigating Musk for years and has a long-standing dispute with the owner of X. At some point, the SEC accused Musk of attempting to stall and “gimmick” the investigation into his investment in Twitter. Last month, Musk announced a copy a letter to SEC Chairman Gary Gensler in which Musk’s lawyer Alex Spiro accused the regulator of “six years of harassment” against Musk. The letter stated that Musk rejected a settlement offer from the SEC related to his Twitter investigation.
Musk also stood in front of one from other Twitter investors and one connection with the delayed disclosure. However, as The New York Times It’s unclear whether the SEC’s latest action will make much difference, as Gensler is expected to resign after President Donald Trump’s inauguration.
X did not immediately respond to a request for comment. In a statement about it The times, Spiro called the SEC’s lawsuit “a single-point ticky-tock complaint” and called it “an admission by the SEC that it cannot make a factual case.”
