After a more than two-year investigation, the Securities and Exchange Commission has sued Elon Musk over his delayed disclosure of the Twitter stock he amassed before announcing his intention to acquire the company in 2022.
In a court filing, the SEC says that Musk filed paperwork with the SEC disclosing his purchase of Twitter shares 11 days after an SEC-mandated deadline to do so. (Federal law, as the SEC notes in its statement, requires investors to publicly report when they have acquired a more than 5 percent stake in a company.) This delay, according to the regulator, allowed Musk to buy up even more Twitter stock at a time when other investors were unaware of his involvement with the company.
From the lawsuit:
During the period that Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $500 million purchasing additional shares of Twitter common stock. Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose. In total, Musk underpaid Twitter investors by more than $150 million for his purchases of Twitter common stock during this period. Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm.
The regulator has been investigating Musk for years, and has long been at odds with the owner of X. At one point, the SEC accused Musk of attempting to stall and use “gamesmanship” to delay its investigation into his investment in Twitter. Last month, Musk shared a copy of a letter addressed to SEC Chair Gary Gensler in which Musk’s lawyer, Alex Spiro, accused the regulator of “six years of harassment” targeting Musk. The letter indicated that Musk refused a settlement offer from the SEC related to its Twitter investigation.
Musk also faced a class action lawsuit from other Twitter investors and an FTC probe related to the delayed disclosure. However, as The New York Times notes, it’s unclear if the SEC’s latest action will amount to much, as Gensler is expected to step down following the inauguration of President Donald Trump.
X didn’t immediately respond to a request for comment. In a statement to The Times, Spiro called the SEC’s action a “a single-count ticky-tack complaint,” calling it “an admission by the S.E.C. that they cannot bring an actual case.”
