On January 14th (Reuters) - Elon Musk was sued by the U.S. Securities and Exchange Commission on Tuesday for failing to promptly disclose in 2022 that he had acquired a significant stake in Twitter, the social media platform he later purchased.
According to a complaint filed in federal court in Washington, D.C., the SEC alleged that Musk violated federal securities regulations by delaying 11 days in reporting his initial purchase of 5% of Twitter's common shares. The SEC rule mandates that investors disclose any ownership exceeding 5% within 10 calendar days, which in Musk's case was by March 24, 2022.
The SEC stated that Musk acquired over $500 million worth of Twitter shares at artificially deflated prices, keeping it undisclosed until April 4, 2022, when he revealed his ownership of a 9.2% stake. Following this disclosure, Twitter's stock price surged over 27%, the SEC reported.
The lawsuit filed on Tuesday aims to compel Musk to pay a civil penalty and surrender unjust gains. Elon Musk later bought Twitter for $44 billion in October 2022, rebranding it as X.
In response to the SEC's lawsuit, Musk's lawyer, Alex Spiro, denounced it as part of the regulator's "multi-year campaign of harassment" against his client. Spiro asserted that Musk committed no wrongdoing and criticized the lawsuit as focusing on an alleged administrative omission with minor repercussions.