The US Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging he failed to properly disclose his ownership of Twitter shares in 2022, allowing him to purchase stock at "artificially low prices".
The markets watchdog claims Musk underpaid other shareholders by at least $150million when acquiring shares before his eventual $44billion takeover of the social media platform.
The lawsuit, filed in a Washington DC federal court, accuses the world's richest man of violating securities laws by delaying mandatory disclosure of his Twitter stake.
According to the SEC filing, Musk began acquiring a "significant number" of Twitter shares in early 2022, surpassing five per cent ownership of the company's common stock by March.
Under SEC rules, investors must report within 10 days when their holdings exceed five per cent, but Musk waited 21 days to make this disclosure.
The billionaire did not reveal his stake until April 4, 2022, by which time he had accumulated more than nine per cent of the company's shares.
The SEC alleges Musk and his wealth manager deliberately delayed disclosure because Twitter's stock price would likely increase as a result.
During the period when Musk hadn't disclosed his purchases, he spent more than $500m acquiring additional Twitter shares "from the unsuspecting public at artificially low prices", according to the SEC complaint.
LATEST DEVELOPMENTS
After Musk finally revealed his ownership stake, Twitter's share price surged by more than 27 per cent.
The SEC alleges Musk "paid significantly less for the shares of Twitter common stock he purchased between March 25, 2022 and April 1, 2022 than if he had timely disclosed".
By this point, he had already expressed interest in acquiring Twitter to a member of the company's board of directors.
Musk's lawyer Alex Spiro dismissed the SEC's case, stating his client "has done nothing wrong and everyone sees this sham for what it is".
Responding directly on the now-rebranded X, Musk called the SEC a "totally broken organisation."
"They spend their time on s*** like this when there are so many actual crimes that go unpunished," the controversial billionaire wrote.
Spiro further claimed the lawsuit represented "an admission by the SEC that they cannot bring an actual case" and called it a "single-count ticky tak complaint" for an administrative failure.
The lawsuit comes as SEC Chairman Gary Gensler prepares to step down from his post on 20 January following President-elect Donald Trump's vow to fire him.
It remains unclear whether the incoming SEC administration will continue to pursue the case against Musk.
Before filing the lawsuit, the SEC had attempted to compel Musk to testify as part of their investigation into his Twitter purchase.
The legal action follows earlier tensions between Musk and Twitter, after he initially tried to back out of the acquisition, prompting the company to sue him to complete the deal.
Find Out More...
The markets watchdog claims Musk underpaid other shareholders by at least $150million when acquiring shares before his eventual $44billion takeover of the social media platform.
The lawsuit, filed in a Washington DC federal court, accuses the world's richest man of violating securities laws by delaying mandatory disclosure of his Twitter stake.
According to the SEC filing, Musk began acquiring a "significant number" of Twitter shares in early 2022, surpassing five per cent ownership of the company's common stock by March.
Under SEC rules, investors must report within 10 days when their holdings exceed five per cent, but Musk waited 21 days to make this disclosure.
The billionaire did not reveal his stake until April 4, 2022, by which time he had accumulated more than nine per cent of the company's shares.
The SEC alleges Musk and his wealth manager deliberately delayed disclosure because Twitter's stock price would likely increase as a result.
During the period when Musk hadn't disclosed his purchases, he spent more than $500m acquiring additional Twitter shares "from the unsuspecting public at artificially low prices", according to the SEC complaint.
LATEST DEVELOPMENTS
- Locals left fuming after yobs trash wildlife garden in the Peak District
- UK weather: Met Office urges Britons to 'amend plans' as yellow fog warning sparks travel chaos
- Danish PM slaps down Trump's Greenland offer but hints at referendum
After Musk finally revealed his ownership stake, Twitter's share price surged by more than 27 per cent.
The SEC alleges Musk "paid significantly less for the shares of Twitter common stock he purchased between March 25, 2022 and April 1, 2022 than if he had timely disclosed".
By this point, he had already expressed interest in acquiring Twitter to a member of the company's board of directors.
Musk's lawyer Alex Spiro dismissed the SEC's case, stating his client "has done nothing wrong and everyone sees this sham for what it is".
Responding directly on the now-rebranded X, Musk called the SEC a "totally broken organisation."
"They spend their time on s*** like this when there are so many actual crimes that go unpunished," the controversial billionaire wrote.
Spiro further claimed the lawsuit represented "an admission by the SEC that they cannot bring an actual case" and called it a "single-count ticky tak complaint" for an administrative failure.
The lawsuit comes as SEC Chairman Gary Gensler prepares to step down from his post on 20 January following President-elect Donald Trump's vow to fire him.
It remains unclear whether the incoming SEC administration will continue to pursue the case against Musk.
Before filing the lawsuit, the SEC had attempted to compel Musk to testify as part of their investigation into his Twitter purchase.
The legal action follows earlier tensions between Musk and Twitter, after he initially tried to back out of the acquisition, prompting the company to sue him to complete the deal.
Find Out More...