The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that the billionaire violated federal securities laws by failing to disclose his acquisition of a significant Twitter stake within the required timeframe.
The complaint, filed in Washington, D.C.’s federal court on Tuesday, centers on Musk’s delayed disclosure of surpassing the 5% ownership threshold in the social media giant, now rebranded as X.
According to the SEC, Musk was obligated to disclose his holdings by March 24, 2022, under the agency’s 10-day disclosure rule. However, the complaint alleges he waited an additional 11 days, revealing his 9.2% stake on April 4, 2022. The SEC contends that Musk exploited the delay to acquire over $500 million worth of Twitter shares at artificially low prices, enriching himself at the expense of unsuspecting investors.
Following Musk’s public disclosure, Twitter’s stock price surged by more than 27%, highlighting the material impact of his delayed announcement. The SEC is seeking civil penalties and disgorgement of what it describes as “undeserved profits.”
Musk’s attorney, Alex Spiro, characterized the lawsuit as part of a “multi-year campaign of harassment” by the SEC, asserting, “Mr. Musk has done nothing wrong, and everyone sees this sham for what it is.”
Musk, who purchased Twitter for $44 billion in October 2022, has been a frequent target of SEC scrutiny. His legal battles with the regulator have included disputes over his 2018 tweets about taking Tesla private, which led to a settlement requiring oversight of his social media communications related to the company.
This latest legal action underscores the SEC’s focus on timely and transparent disclosures to protect market integrity and investor trust. Musk, a prominent figure in tech and finance, has not yet publicly commented on the suit.
