US SEC Sues Elon Musk Over Failure to Timely Disclose Twitter Ownership
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, the worlds richest man, for failing to disclose his acquisition of Twitter (renamed X) stock on time.
According to the complaint, Musk started accumulating shares of Twitter common stock in early 2022 and, by March 14, had crossed the 5% stock ownership threshold. At this point, he was required to report his ownership in the company, but he failed to do so, the agency said.
Federal securities law requires individuals to disclose their ownership of more than 5% of a publicly traded companys stock within 10 days of reaching that threshold.
Timely Disclosure
However, Musk disclosed his ownership only 11 days after the report was dueon April 4, 2022. By this time, the tech billionaire had already acquired over 9% of Twitter stock.
The securities watchdog argued that Musks failure to disclose allowed him to continue purchasing shares at artificially low prices as the market was unaware of his significant stake. They claim this resulted in an unjust enrichment of at least $150 million from the stock acquisition during the 10 days.
Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm, the complaint stated.
The SEC seeks disgorgement of Musks unjust enrichment alongside prejudgment interest.
Elon Musk Reacts
In a statement on X, Musk responded to the suit, describing the SEC as a totally broken organization.
They spend their time on shit like this when there are so many actual crimes that go unpunished, he added.
Musk initiated the acquisition of Twitter in April 2022 and completed it in October of the same year for $44 billion. He has since transformed the platform by introducing features like account monetization, audio-video calls, an in-app AI chatbot, and long-form texts.
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