SEC Sues Musk Over Twitter Stake Disclosure
Just days before Donald Trump's inauguration as the 47th U.S. President, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against tech billionaire Elon Musk, alleging a securities violation related to his acquisition of Twitter (now X) in 2022. The SEC claims that Musk failed to timely disclose his 5% ownership stake in the social media platform, thereby violating federal securities laws.
The complaint filed in federal court in Washington, D.C. against Musk accused him of waiting to disclose his stake so he could build a bigger position in Twitter at a cheaper price. According to the complaint, Musk had purchased more than 5% of Twitter on March 24, 2022, but didn't file the beneficial ownership report required by the law until April 4, 2022.
According to reports, during this delay, Musk increased his stake in Twitter from 5% to 9%. The SEC argues that because Musk did not disclose his intentions early on, he ended up buying more shares at a cheaper cost, which is against SEC rules.
Musk's lawyers retaliated by terming the complaint a 'ticky-tack complaint', which meant that the long campaign against Musk by the SEC ended in this single charge. Lawyers for the billionaire contended that no case of substance had been presented against him.
The SEC lawsuit comes as Gary Gensler, the current SEC Chairman, prepares to step down on January 20, the day Trump assumes office. Trump has nominated Paul Atkins, a former SEC Commissioner, as the new SEC chief. Musk, who purchased Twitter for $44 billion in October 2022, has faced ongoing scrutiny from the SEC over his business dealings.
