Elon Musk gets sued by the Securities and Exchange Commission
The US Securities and Exchange Commission (SEC) has sued Elon Musk for allegedly misleading shareholders. This is about the takeover of the social media platform Twitter, which the authority has been investigating for a long time.
Deadlines not met
The accusation: Musk is said to have violated federal law when purchasing Twitter shares in 2022 – before taking over the company – by not disclosing his shareholding in a timely manner. According to the lawsuit, this allowed him to purchase the shares at an artificially low price, saving over $150 million.
Musk is said to have invested more than $500 million in Twitter shares without reporting the resulting stake of over five percent in the company on time, as would be required by law. This resulted in the stock price not immediately responding to the importance of the investments. Instead, Musk waited 11 days before making his stake public – a violation of disclosure requirements, the SEC points out.
Musk bought Twitter, which has since been renamed X, in October 2022 for around $44 billion. The SEC now wants to go to court to force Musk to pay back ill-gotten gains and pay a civil penalty. Musk sharply rejected the allegations. He designated called the SEC a “completely broken organization” and accused it of wasting its time on “stuff like that” instead of prosecuting real crimes. His lawyer, Alex Spiro, criticized the requested settlement amount of $263 million as “excessive and unprecedented.” He also accused the SEC of deliberately harassing Musk through years of proceedings.
Got away too cheaply
The SEC emphasized that its lawsuit is based on a clear violation of disclosure requirements. According to the authority, Twitter’s share price rose by 27 percent after Musk’s delayed report. If the buyer had adhered to the legal regulations, this would probably have happened earlier and Musk would have had to make at least some of the share purchases at higher prices.
The lawsuit comes at a time when Musk is working closely with Donald Trump, who is about to return to the White House. Musk supported Trump’s campaign with over a quarter of a billion dollars. What impact this will have on an ongoing lawsuit will probably become clear after the new president is inaugurated.
