In a new development, the US Securities and Exchange Commission (SEC) has filed a lawsuit against billionaire entrepreneur Elon Musk, claiming he did not disclose his acquisition of a substantial stake in Twitter, resulting in a $150 million loss for investors.
US SEC Files Lawsuit Against Musk Over Twitter Holdings Disclosure
US SEC Files Lawsuit Against Musk Over Twitter Holdings Disclosure
The Securities and Exchange Commission accuses Elon Musk of failing to report a significant Twitter stake, impacting shareholder value.
The SEC's complaint, submitted to a federal court in Washington DC, alleges Musk violated federal securities laws by delaying the necessary reporting of his Twitter shares beyond the mandated 10-day period after surpassing the 5% ownership threshold. Instead of promptly informing the market, Musk waited for 21 days, allowing him to purchase shares at "artificially low prices," therefore benefiting at the expense of Twitter's shareholders.
In response to the lawsuit, Musk took to social media to express his disdain for the SEC, labeling it a "totally broken organization" and accused it of misdirecting resources towards him instead of addressing more serious crimes. Musk’s attorney, Alex Spiro, characterized the case as a “sham” and claimed it was part of an ongoing “campaign of harassment” against Musk.
This controversy follows Musk’s initial share acquisition announcement on April 4, 2022, which caused a significant rise in Twitter's stock price by more than 27%. The billionaire later finalized his takeover of Twitter for a reported $44 billion in October 2022, subsequently rebranding the platform to X.
The SEC, under the direction of Gary Gensler, has had a tumultuous history with Musk. The regulatory body previously charged him in 2018 over misleading statements regarding Tesla's status as a private entity, which led to a settlement that included limitations on Musk’s communication regarding the company.
As the case unfolds, the SEC has requested the court to compel Musk to relinquish what the agency deems as “unjust profits” from the undisclosed purchases, alongside imposing a financial penalty. With Gensler's impending resignation upon Donald Trump’s return to the White House, this case adds another layer of complexity to both Musk's business dealings and regulatory oversight in the tech sector.
In response to the lawsuit, Musk took to social media to express his disdain for the SEC, labeling it a "totally broken organization" and accused it of misdirecting resources towards him instead of addressing more serious crimes. Musk’s attorney, Alex Spiro, characterized the case as a “sham” and claimed it was part of an ongoing “campaign of harassment” against Musk.
This controversy follows Musk’s initial share acquisition announcement on April 4, 2022, which caused a significant rise in Twitter's stock price by more than 27%. The billionaire later finalized his takeover of Twitter for a reported $44 billion in October 2022, subsequently rebranding the platform to X.
The SEC, under the direction of Gary Gensler, has had a tumultuous history with Musk. The regulatory body previously charged him in 2018 over misleading statements regarding Tesla's status as a private entity, which led to a settlement that included limitations on Musk’s communication regarding the company.
As the case unfolds, the SEC has requested the court to compel Musk to relinquish what the agency deems as “unjust profits” from the undisclosed purchases, alongside imposing a financial penalty. With Gensler's impending resignation upon Donald Trump’s return to the White House, this case adds another layer of complexity to both Musk's business dealings and regulatory oversight in the tech sector.
