US Watchdog Sues Elon Musk Over Delayed Twitter Stake Disclosure
US Watchdog Sues Elon Musk Over Delayed Twitter Stake Disclosure.
The United States Securities and Exchange Commission has initiated legal action against Elon Musk, claiming that he neglected to reveal his acquisition of a significant stake in Twitter, which enabled him to purchase shares at "artificially low prices."
The lawsuit asserts that the billionaire CEO of Tesla benefited by $150 million (£123 million) from these share transactions.
Under SEC regulations, investors who exceed a 5% ownership threshold are required to report this within 10 days. However, Musk reportedly disclosed his stake 21 days after the acquisition, according to the legal filing.
In a statement on social media, Musk referred to the SEC as a "totally broken organisation."
He further criticized the regulator for its focus on this matter, suggesting that it should address more pressing crimes that remain unpunished.
"Musk's violation resulted in substantial economic harm to investors," the SEC complaint said, external.
In a communication sent to BBC News, Musk's attorney, Alex Spiro, characterized the lawsuit as a "sham" and a "campaign of harassment" directed at his client.
According to the SEC, Twitter's stock price surged by over 27% following the public disclosure of Musk's share acquisition on April 4, 2022.
Musk ultimately purchased Twitter for $44 billion in October 2022 and subsequently rebranded the platform as X.
The complaint was filed by the SEC in a federal court located in Washington, D.C., on Tuesday.
The lawsuit also requested that the court mandate Musk to forfeit "unjust" profits and impose a financial penalty.
Gary Gensler, the head of the SEC, announced in November his intention to resign from his position upon Donald Trump's return to the White House on January 20.
Following Trump's announcement of his intention to dismiss Mr. Gensler on the first day of his new administration, tensions escalated. Under Mr. Gensler's direction, the SEC found itself in conflict with Musk, a prominent supporter of the president-elect.
However, Musk's disputes with the SEC predated Mr. Gensler's tenure. In 2018, the regulatory body accused Musk of misleading investors by asserting that he had "funding secured" to take Tesla, the electric vehicle manufacturer he heads, private.
Subsequently, he reached a settlement that required him to resign as chairman of the board and adhere to restrictions on his social media communications regarding the company.
The SEC’s lawsuit against Elon Musk highlights the importance of regulatory oversight in maintaining fair market practices and protecting investors. By holding Musk accountable for his delayed disclosure, the SEC aims to ensure that all stakeholders, from small investors to major corporations, operate on a level playing field.
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While Musk’s legal team disputes the claims, the case serves as a reminder of the critical role transparency plays in the financial markets. Ultimately, enforcing disclosure requirements fosters investor confidence and strengthens the integrity of financial systems, contributing to a more secure and transparent investment environment for all.
