The US Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing the billionaire of failing to disclose his significant Twitter stake in a timely manner during 2022.
The legal action alleged that Musk violated federal securities laws by waiting 11 days beyond the required deadline to report his acquisition of 5% of Twitter’s shares, a delay that potentially affected unsuspecting investors.
The lawsuit, filed in federal court in Washington, D.C., claims Musk was obligated under SEC rules to disclose his 5% ownership threshold by March 24, 2022.
Instead, he continued purchasing more than $500 million worth of Twitter shares at what the SEC claims were “artificially low prices.” Musk ultimately disclosed his 9.2% ownership stake on April 4, 2022, causing Twitter’s stock price to surge over 27% that day.
The lawsuit seeks to impose a civil fine and require Musk to disgorge any profits obtained during the delay. Musk went on to purchase Twitter, later rebranded as “X,” for $44 billion in October 2022.
SEC Chair Gary Gensler stated that the case underscores the importance of timely disclosures to protect market integrity.
Alex Spiro, Musk’s attorney, dismissed the SEC’s lawsuit as baseless, calling it “the culmination of the regulator’s 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 in an emailed statement. “Mr. Musk has done nothing wrong, and everyone sees this sham for what it is.” He further characterized the issue as an “alleged administrative failure to file a single form,” emphasizing that any penalties, if proven, would be nominal.
Musk faces additional legal challenges over his Twitter acquisition. A separate lawsuit filed by former Twitter shareholders in Manhattan federal court accuses Musk of delaying his disclosure to manipulate stock prices. Musk has denied the claims, asserting the delay was unintentional.
Musk has a history of contentious interactions with the SEC. In 2018, the regulator sued him over tweets about taking Tesla private, resulting in a $20 million settlement and an agreement to have his Tesla-related tweets pre-approved by company lawyers.
In another dispute, the SEC sought sanctions against Musk for missing court-ordered testimony related to its Twitter investigation. Musk later complied and reimbursed the SEC’s travel expenses.
Musk, the CEO of Tesla and SpaceX, holds the title of the world’s richest person with a net worth of $417 billion, according to *Forbes*. He is nearly twice as wealthy as Jeff Bezos, the founder of Amazon, whose fortune stands at $232 billion.
