The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk. According to accusations, Elon Musk failed to disclose the growing stake he had in Twitter Inc. in time as it is legally expected. This time gap is stated to have aided Musk in acquiring shares at reduced prices before officially declaring his holding. These accusations form the basis of the ongoing case where SEC sues Elon Musk.
Why the SEC sues Elon Musk over Twitter shares
According to the SEC’s complaint, Musk crossed the 5% ownership threshold of Twitter shares in March 2022. Federal law requires investors to disclose such acquisitions within ten days. However, the SEC alleges Musk delayed filing his disclosure by 11 days, enabling him to buy additional shares at what it describes as “artificially low prices.”
The SEC claims this delay saved Musk $150 million. When his stake was finally disclosed, Twitter’s stock price surged by 27%, reflecting the billionaire’s significant influence on the market.
Musk’s legal team responds to SEC lawsuit
Alex Spiro, Musk’s attorney, dismissed the SEC’s case, calling it a “sham” and an attempt to amplify what he characterized as a minor administrative error. Spiro described the lawsuit as evidence of the SEC’s inability to present a substantive case against Musk.
SEC seeks penalties for alleged misconduct
The SEC’s investigation into Musk’s Twitter stake began in 2022, questioning why he had not disclosed his holdings on time. The agency alleges that Musk’s actions violated transparency requirements and allowed him to profit unfairly.
The lawsuit seeks civil penalties and the return of profits the SEC claims were unjustly earned. This case adds to Musk’s history of regulatory challenges, including past disputes with the SEC over Tesla-related matters.
Musk faces additional legal challenges
Beyond the SEC lawsuit, Musk is also dealing with shareholder litigation. Investors allege that his delayed disclosure misled the market and caused financial harm to shareholders. Just to simplify the context, the official case is titled ‘Securities and Exchange Commission v. Musk,’ filed in the U.S. District Court for the District of Columbia.
