The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against billionaire Elon Musk, accusing him of failing to disclose his significant ownership of Twitter stock in a timely manner before purchasing the company in October 2022. The SEC alleges this delay allowed Musk to save at least $150 million when buying additional shares.
The Timeline of Musk’s Twitter Stock Purchases
According to the SEC complaint, Musk began acquiring Twitter shares in early 2022. By March of that year, he owned over 5% of the company’s stock, a threshold that legally required disclosure within ten days. However, Musk delayed filing the necessary paperwork until April 4, missing the deadline by 11 days.
This delay, the SEC contends, prevented other investors from realizing Musk’s growing stake, which could have influenced the stock’s price.
Musk’s Response to the SEC Allegations
Musk’s lawyer, Alex Spiro, has dismissed the lawsuit, calling it a “sham” and accusing the SEC of harassment. “This is an admission by the SEC that they cannot bring an actual case,” Spiro said, claiming the complaint focuses on a minor administrative oversight. He added that even if proven, the alleged violation carries only a nominal penalty.
The Twitter Acquisition and Its Fallout
Musk finalized his $44 billion acquisition of Twitter in October 2022, renaming it X. Before the deal closed, Musk attempted to back out, prompting Twitter to sue him to complete the purchase.
The SEC said it began investigating Musk’s Twitter stock purchases in April 2022 to determine if any securities laws were violated. Before filing the lawsuit, the SEC sought to compel Musk to testify as part of its ongoing investigation.
Gary Gensler’s Departure and Uncertain Future of the Case
The lawsuit comes as SEC Chair Gary Gensler prepares to step down on January 20. It remains unclear whether the incoming administration will continue pursuing the case against Musk.
Musk’s legal team has suggested the timing of the lawsuit may be linked to Gensler’s departure, framing it as a last-ditch effort to target the Tesla and SpaceX CEO.
Musk’s Broader Relationship with the SEC
This is not Musk’s first clash with the SEC. The agency previously fined him $20 million in 2018 for tweeting about plans to take Tesla private, a settlement that also required him to step down as Tesla’s chairman temporarily.
As Musk faces yet another legal battle, his critics and supporters remain divided over whether the SEC’s actions are warranted or politically motivated.