The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he failed to disclose his substantial purchases of Twitter stock within the required timeframe in early 2022. This delay purportedly allowed Musk to acquire additional shares at suppressed prices, potentially saving him over $150 million.
According to the SEC, Musk began acquiring Twitter shares in January 2022, surpassing the 5% ownership threshold by March 14, 2022. Under federal securities laws, investors who exceed this threshold must file a disclosure with the SEC within ten days. However, Musk did not file the necessary disclosure until April 4, 2022, 11 days past the deadline. This delay allegedly enabled him to continue purchasing shares at lower prices, disadvantaging other investors who were unaware of his significant stake.
The SEC’s lawsuit contends that Musk’s actions violated the Securities Exchange Act of 1934, which mandates timely disclosures to ensure market transparency and protect investors. By delaying his disclosure, Musk is accused of gaining an unfair advantage in the market, undermining the principles of fair and equitable trading.
In response to the lawsuit, Musk’s legal team has dismissed the allegations as unfounded, characterizing the SEC’s actions as part of a prolonged harassment campaign against him. They argue that the delayed disclosure did not harm investors and that Musk complied with all relevant regulations once the disclosure was made.
This legal action adds to Musk’s history of disputes with the SEC. In 2018, he faced charges over a tweet suggesting he had secured funding to take Tesla private, leading to a settlement that included fines and his stepping down as Tesla’s chairman.
The outcome of this lawsuit could have significant implications for Musk and his business ventures, as well as for regulatory oversight of large stock acquisitions. The SEC is seeking financial penalties and the disgorgement of any ill-gotten gains resulting from the delayed disclosure.
As the case proceeds, it will be closely watched by investors, legal experts, and the public, given Musk’s high-profile status and the substantial influence he wields in the technology and financial sectors.
