The Securities and Exchange Commission sues Musk, alleging failure to properly disclose Twitter ownership

The Securities and Exchange Commission sued Elon Musk on Tuesday, alleging that the billionaire committed securities fraud in 2022 by not disclosing that he had amassed an active stake in Twitter, a secret that allowed him to buy shares at “artificially low prices.”

Musk, who is also CEO of Tesla and SpaceX, Bought Twitter For $44 billion in late 2022 and changed the name to X the following year. Prior to the acquisition, he had built up a position in the company owning more than 5%, which would have required disclosing his holdings to the public.

According to the SEC’s civil complaint, which was filed in U.S. District Court in Washington, D.C., Musk concealed that material information, “allowing him to underpay at least $150 million for the shares he purchased after the ownership report was due.” beneficial financial.

It was the Securities and Exchange Commission Investigation Whether Musk, or anyone else working for him, committed securities fraud in 2022 Tesla The CEO sold shares in his car company and leveraged his stake in Twitter before the leveraged buyout. Musk He said In a post on

Alex Spiro, Musk’s lawyer, said in an emailed statement that the action is an admission by the SEC “that they cannot bring an actual case.” He added that Musk “did nothing wrong” and described the lawsuit as “false” and the result of a “several years-long harassment campaign,” culminating in a “tack complaint.”

Musk is just one week away from a potentially influential role in government, as President-elect Donald Trump’s second term begins on January 20. Musk, who was a major financial backer of Trump in the final stages of the campaign, is preparing to lead an advisory group that will focus in part on reducing regulations, including those affecting Musk’s various companies.

In July, Trump pledged to fire SEC Chairman Gary Gensler. After Trump won the election, Gensler announced that he would resign from his position instead.

In a separate civil lawsuit related to the Twitter deal, the Oklahoma Firefighters Retirement and Retirement System has sued Musk, accusing him of intentionally concealing his progressive investments in the social network and intent to buy the company. Lawyers for the pension fund argued that Musk, by failing to clearly disclose his investments, had influenced the decisions of other shareholders and put them at a disadvantage.

Musk exceeded the 5% ownership threshold in March 2022 and would have been required to disclose his holdings by March 24, the SEC said.

“On April 4, 2022, eleven days after the report was due, Musk finally publicly disclosed his beneficial ownership in a filing with the Securities and Exchange Commission, disclosing that he had acquired more than nine percent of Twitter’s outstanding shares,” the complaint says. “On that day, Twitter’s stock price rose more than 27% from the previous day’s closing price.”

The SEC alleges that Musk spent more than $500 million to buy more Twitter shares during the period between the required disclosure and the day of his actual filing. This enabled him to purchase stock from “the unsuspecting public at artificially low prices,” the complaint says. He “paid out” Twitter shareholders more than $150 million during that period, according to the Securities and Exchange Commission.

In the complaint, the SEC seeks a jury trial and asks that Musk be forced to “pay restitution for his unjust enrichment” as well as a civil penalty.

Briefly in April 2022, after his ownership was announced and he is known to be the largest shareholder, Musk was scheduled to join Twitter’s board of directors. However, he soon abandoned that plan. The council says He will not take a seat.

What followed was a six-month drama that began with Musk submitting an unsolicited offer in mid-April, which the board opposed. Twitter’s board of directors eventually approved Musk’s offer later that month. Shortly afterward, Musk tried to backpedal, claiming that Twitter was getting the number of “bots” on its service wrong.

Musk eventually closed the deal in October 2022, walking into the company’s San Francisco office with a sink in hand.

“Walking into Twitter HQ – let that sink in!” Musk booksAttached is a video of his entry.

This story is evolving.