The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing the billionaire of securities fraud in 2022 for failing to disclose that he had accumulated an active stake in Twitter, a secrecy that allowed him to Buy stocks at “artificially low prices.”
Musk, who is also the CEO of Tesla and SpaceX, acquired Twitter for $44 billion at the end of 2022 and changed its name to X the following year. Prior to the acquisition, his stake in the company exceeded 5%, which requires disclosure of his holdings to the public within 10 calendar days of reaching that threshold.
According to the SEC’s civil complaint filed in the District Court in Washington, D.C., Musk was more than 10 days late in reporting this material information, “which resulted in him underpaying at least $150 million for the shares he purchased after the financial beneficial ownership report.” Expired.
The U.S. Securities and Exchange Commission has been investigating whether Musk or others working with him committed securities fraud in 2022, when the Tesla executive sold stock in his car company ahead of a leveraged buyout and increased his holdings Shares in Twitter. Musk posted on
Alex Spiro, Musk’s attorney, said in an emailed statement on Tuesday that the SEC’s action acknowledged “that they were unable to bring an actual case.” He added that Musk “did nothing wrong” and called the lawsuit a “sham” and the result of a “years-long campaign of harassment” that culminated in “a single allegation.”
President-elect Donald Trump’s second term begins on January 20, just a week before Musk takes on a potentially influential role in the administration. A major financial backer, he is poised to play an important role in the campaign.
In July, Trump vowed to fire SEC Chairman Gary Gensler. After Trump was elected, Gensler announced his resignation.
In a separate civil lawsuit over the Twitter deal, the Oklahoma Firefighters Pension and Retirement System is suing Musk, accusing him of intentionally concealing his incremental investment in the social network and his intent to acquire the company. Lawyers for the pension fund argued that Musk’s failure to clearly disclose his investments affected the decisions of other shareholders and put them at a disadvantage.
The SEC stated that Musk’s shareholding ratio exceeded 5% in March 2022 and therefore needed to disclose his shareholdings before March 24.
The complaint reads: “On April 4, 2022, eleven days after the report was due, Musk finally publicly disclosed his beneficial ownership in a report filed with the SEC and revealed that he had acquired more than 9% of Twitter. of outstanding shares. “On that day, Twitter’s stock price rose more than 27% from the previous day’s closing price. “
The SEC said Musk spent more than $500 million to buy more Twitter stock between the required disclosures and the date of the actual filing. This allowed him to purchase stock from an unsuspecting public at artificially low prices, the indictment alleges. According to the SEC, he “underpaid” Twitter shareholders by more than $150 million during this period.
In the complaint, the SEC is seeking a jury trial, forcing Musk to “repay his unjust gains” and civil penalties.
In April 2022, after his ownership is made public and he is known to be the largest shareholder, Musk will join Twitter’s board of directors. However, he quickly abandoned the plan and told the board he would not be seated.
What followed was a six-month drama that began with Musk’s unsolicited takeover bid in mid-April, which was met with resistance from the board. Twitter’s board ultimately accepted Musk’s proposal later that month. Shortly thereafter, Musk tried to backtrack, claiming Twitter had misrepresented the number of “bots” on its service
Musk finally closed the deal in October 2022, when he walked into the company’s San Francisco offices with a sink in hand.
“Get inside Twitter HQ — let’s get this straight!” Musk wroteattached is a video of his entrance.
This story is developing.
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