The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against tech billionaire Elon Musk, accusing him of failing to disclose his ownership of more than 5% of Twitter ahead of his acquisition of the company in 2022.
The SEC claims that Musk began buying Twitter shares in early 2022 and crossed the 5% ownership threshold on March 14, 2022. Under federal securities law, Musk was required to disclose his ownership stake publicly within 10 calendar days. However, he did not announce that he had acquired 9% of the company until April 4, 11 days after the deadline, according to the SEC.
The delay in disclosure resulted in Twitter’s share price jumping by 27% once Musk’s stake was made public, the SEC filing notes. The agency’s analysis of Musk’s stock purchases suggests that he “underpaid by at least $150 million” for his Twitter shares during this period. The lawsuit also claims that shareholders who sold him their shares at this time may have suffered financial losses.
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The SEC is seeking repayment of the underpaid amount, along with an additional penalty.
Musk’s lawyer, Alex Spiro, has denied any wrongdoing, stating that the tech mogul “did nothing wrong.” Spiro also criticised the SEC, claiming that Musk has been the target of a multi-year campaign of harassment by the agency.
It remains unclear how the lawsuit will proceed, especially as the U.S. approaches a transition of power. Musk is a close ally of former U.S. President Donald Trump, who is set to be inaugurated as president on January 20. The leadership change will also see a new head of the SEC, with current chairman Gary Gensler already announcing his resignation.
Musk purchased Twitter for $44 billion in October 2022 and subsequently rebranded the platform as X.
