On Tuesday, the United States Securities and Exchange Commission pursued legal action against Elon Musk for taking too long to disclose the acquisition of a large stake in the social media Twitter in 2022, before he bought it.
In a complaint filed to the federal court in Washington D.C., Musk was accused of violating federal securities law by failing to disclose his 5% purchase of Twitter’s common share within 10 calendar days.
The SEC claim that Musk has bought at least $500 million of Twitter shares at artificially low prices at the expense of unsuspecting investors, before revealing his purchase on 4 April 2022 when he owns 9.2% stake. Musk is supposed to disclose his purchase on 24 March 2022.
After the disclosure, Twitter’s share price surge exceeded 27%, according to the SEC.
The lawsuit aims to force Musk to pay a civil fine and disgorge his undeserved profit.
Musk later bought the entirety of Twitter in October 2022 and renamed it X.
Musk’s lawyer, Alex Spiro, in an email, called the SEC lawsuit part of the regulator’s multi-year harassment campaign.
Alex has called out the SEC for not being able to bring an actual case against Musk, while also insisting on his client’s innocence. He also calls the lawsuit a mere administrative failure to file a single form.
Musk has also been sued in a federal court in Manhattan for late disclosure by a former Twitter shareholder. He said the indication of him wanting to defraud other shareholders or that his delay in disclosure was a mistake is inconceivable.
The SEC also sued Musk in 2018 for posting on Twitter that he would and had the means to take Tesla private, which the case was settled with Musk paying a $20 million civil fine, having a lawyer review his Twitter post in advance, and step down as Tesla’s chairman.
