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The Securities and Exchange Commission filed a lawsuit against Elon Musk on Tuesday over an alleged securities violation relating to his acquisition of Twitter, now called X.<\/p>\n
The SEC claims Musk failed to disclose his 5% ownership stake of Twitter in a timely manner, violating federal securities law, according to a complaint filed in federal court in Washington DC. The SEC alleges Musk waited to disclose the acquisition in order to build up a larger position in Twitter at a discounted price.<\/p>\n
This lawsuit comes during Gary Gensler\u2019s final week as chairman of the SEC, before he steps down on January 20. Gensler and Musk have had a few spats over the last four years, including just last month when Musk mocked a settlement offer from the SEC\u2019s office on X<\/a>. However, Musk could face a friendlier SEC commissioner in just a few weeks when Trump\u2019s nominee takes office.<\/p>\n The SEC complaint says Musk disclosed his acquisition of Twitter 11 days late. After purchasing more than 5% of Twitter \u2013 which Musk allegedly did on March 24, 2022 \u2013 he was required by the SEC to file a beneficial ownership report. He filed the report April 4, 2022, according to the SEC\u2019s complaint.<\/p>\n During this delayed disclosure period, Musk allegedly increased his position in Twitter from a 5% stake to a 9% stake. The day Musk disclosed his acquisition with the SEC, Twitter\u2019s stock price increased 27% over the previous day\u2019s closing price. The SEC claims this allowed Musk to underpay for his stake in Twitter by more than $150 million.<\/p>\n In its complaint, the SEC proposed Musk should return the profits he reaped unjustly, and pay an additional civil penalty. Ultimately, a federal court will decide whether the SEC\u2019s allegations have merit, and determine if Musk should be fined. <\/p>\n Musk\u2019s lawyer, Alex Spiro, called this complaint an \u201cadmission\u201d that the SEC cannot bring an \u201cactual case,\u201d in a statement to Bloomberg<\/a> on Tuesday.<\/p>\n \u201cAs the SEC retreats and leaves office, the SEC\u2019s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk,\u201d said Spiro to Bloomberg.<\/p>\n In a December post on X, Musk shared a letter from Spiro hitting on similar notes, also referencing \u201cyears of harassment\u201d from the SEC<\/a>. That letter rejected a settlement offer from the SEC around this case.<\/p>\n To fill Gensler\u2019s role, President-elect Donald Trump nominated Paul Atkins<\/a>, who served as SEC Commissioner during the Bush administration and is expected to be friendlier to Trump\u2019s allies. These days, Musk is about as close to Trump as anyone, and the owner of X could face a different regulatory regime in just a few weeks. <\/p>\n<\/div>\n