U.S. financial regulators have charged Elon Musk with threatening other shareholders by failing to disclose his ownership of Twitter shares and then acquiring the company's shares at “artificially low prices.”
The Securities and Exchange Commission (SEC) filed suit late Tuesday against Musk in federal court in Washington, D.C., alleging securities violations. The complaint alleges that Musk did not disclose that he acquired the 5% stake in the company in a timely manner, and that he therefore received “at least $150,000. The company ended up paying less than $1,000,000.
Musk bought Twitter for $44 billion in 2022 and later changed the company's name to X. Before the deal, Musk bought a 5% stake in the company, which would normally require a public offering. The SEC alleges that Musk disclosed his ownership on Twitter 11 days after the reporting deadline.
Musk's lawyer, Alex Spiro, said in an emailed statement that the SEC's lawsuit amounts to an “admission” that the SEC has no case. Spiro said Musk “did nothing wrong and everyone sees this fake for what it is.”
This is not the first time the SEC has investigated Musk's acquisition of Twitter. agency started an investigation Musk and his brother Kimbal Musk were charged with securities fraud and violating insider trading rules in 2021 after selling tens of thousands of Tesla shares. Musk is Tesla's CEO and his brother is a member of the company's board of directors.
Spiro said the SEC's lawsuit is the result of the administration's alleged failure to “file a single application.” He added: “The SEC's multi-year harassment campaign against Mr. Musk culminated in the filing of a single tick-tock complaint against Mr. Musk.”
Over the past few months, Musk has developed a close relationship with Donald Trump. Mr. Musk donated millions of dollars to his re-election effort and campaigned with him. President Trump has since appointed Musk to head an advisory group, which he claims will create an advisory group called the Department of Government Efficiency to oversee government regulation and spending.
The SEC alleges in the lawsuit that before Musk delayed disclosing his ownership on Twitter, he spent more than $500 million buying additional shares in the company and “unsuspecting members of the public.” It is suspected that the company was able to purchase the stock at an artificially low price.
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When Musk finally disclosed his ownership to the SEC 11 days later, he said he had acquired more than 9% of Twitter's stock. “On that day, Twitter's stock price rose more than 27% from the previous day's closing price,” the SEC wrote in its complaint.
