News Brief
Ahead Of Trump Inauguration, Elon Musk Sued By US SEC Over Delayed Disclosure Of Twitter Stake
X (formerly Twitter) owner Elon Musk. (Image: Shutterstock)
The US Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday (14 January), accusing him of violating federal securities laws by delaying the disclosure of his substantial stake in Twitter, which he later acquired and renamed X.
The complaint, filed in a Washington, DC federal court, centres on Musk’s alleged failure to disclose his purchase of 5 per cent of Twitter's common shares within the mandated 10-day period.
The SEC claims Musk delayed his disclosure by 11 days, with the deadline being March 24, 2022, but only made the purchase public on April 4, 2022. By that time, Musk’s stake had grown to 9.2 per cent.
According to the SEC, the delay allowed Musk to acquire more than $500 million worth of Twitter shares at "artificially low prices," costing unsuspecting investors. Following his disclosure, Twitter’s share price surged by over 27 per cent.
The lawsuit seeks to impose a civil fine and compel Musk to return any profits deemed undeserved.
Alex Spiro, Musk’s attorney, dismissed the SEC’s claims, calling the lawsuit the culmination of a "multi-year campaign of harassment" against Musk. He stated, “Today’s action is an admission by the SEC that they cannot bring an actual case. Musk has done nothing wrong and everyone sees this sham for what it is.”
Musk, who completed the $44 billion acquisition of Twitter in October 2022, has a history of disputes with the SEC.
In 2018, the regulator sued him over his tweets about taking Tesla private, resulting in a $20 million settlement and an agreement for Tesla lawyers to review certain social media posts.
The SEC’s latest lawsuit adds to Musk’s legal challenges, including a separate case in Manhattan federal court filed by former Twitter shareholders over the same delayed disclosure.
Musk contends the delay was an inadvertent mistake, arguing it is implausible to suggest he intended to defraud shareholders.
The SEC’s action comes as its Chair Gary Gensler prepares to step down ahead of Trump inauguration, with his successor expected to review enforcement measures.
