The Securities and Exchange Commission (SEC) has charged tech billionaire Elon Musk with securities fraud by failing to disclose his ownership stake in Twitter Inc.
According to the SEC's complaint filed Tuesday in Washington, D.C. District Court, Musk provided information that allowed him to underpay for Twitter stock he purchased “after the deadline for filing financial beneficial ownership statements had passed.” It is said that he withheld it.
The SEC began investigating Musk in April 2022 over his initial purchase of Twitter stock and various SEC filings related to the social media company.
Musk increased his stake in Twitter, now known as X, before buying it for $44 billion in October 2022.
The SEC requires investors to disclose if they own more than 5% of a company's stock. According to the complaint, Musk did not disclose any of his shares in Twitter until April 4, 2022, when he owned more than 9% of the shares.
“During the period in which Mr. Musk was required to disclose his beneficial ownership and failed to do so, he spent more than $500 million to purchase additional shares of Twitter common stock,” the SEC said. “Mr. Musk's failure to timely disclose his beneficial ownership interests allowed him to make these purchases at artificially low prices from the unsuspecting public.”
The SEC alleges that Musk underpaid Twitter investors by more than $150 million during that period.
Musk has previously criticized the SEC over its proposed settlement of an investigation. In a letter to SEC Chairman Gary Gensler last month that Musk shared regarding He said he was given 48 hours to do so. Spiro said the agency has harassed Musk for years.
The tech billionaire named co-head of President-elect Trump's Office of Government Efficiency has previously given two depositions before the SEC, but has declined to testify for a third time in 2023. He later agreed to testify but omitted it. Scheduled to appear in September last year.
The SEC announced that it would discipline the billionaire after he failed to give scheduled testimony.
The lawsuit will be one of the last for SEC Chairman Gary Gensler, who had said he would resign before being fired by President Trump. Trump, who has grown closer to Musk in recent months, could force Gensler's successor, Paul Atkins, to withdraw the lawsuit.
The Hill has reached out to Musk's attorney. In a statement to CNBCAlex Spiro said the move is an admission that the SEC can't “actually sue.” He said Musk had done nothing wrong and called the lawsuit “a sham.”
