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Elon Musk has been sued in a Washington federal court for disclosing his stake in Twitter beyond the stipulated time before the purchase of the platform.
Tesla CEO Elon Musk (Reuters Image)
Tesla CEO Elon Musk was sued on Tuesday by the United States Securities and Exchange Commission for allegedly waiting too long to disclose in 2022 that he had acquired a large stake in Twitter, the social media platform he later went on to buy.
In a complaint filed in Washington DC federal court, the SEC said that Musk violated federal securities law by waiting 11 days to disclose his purchase of 5 per cent of Twitter’s common shares.
According to a SEC rule, the investors are required to disclose within 10 calendar days when they cross a 5 per cent ownership threshold. Musk was required to disclose his investment by March 24, 2022.
The SEC filed a lawsuit against Musk, who will have a big role to play in the incoming administration, only six days before Trump’s return to the office on January 20.
The SEC said that Musk exploited unsuspecting investors by purchasing over $500 million worth of Twitter shares at artificially low prices. He disclosed his acquisitions only on April 4, 2022, by which time he had amassed a 9.2% stake in the company.
Twitter’s share price increased more than 27 per cent following his disclosure, the SEC said.
The lawsuit filed on Tuesday is intended to compel Musk to pay a civil penalty and return any unjustly earned profits. Musk, the world’s richest man, ultimately bought Twitter for $44 billion in October 2022 and later renamed it ‘X’.
Alex Spiro, a lawyer for Musk, dubbed the SEC lawsuit the culmination of the regulator’s “multi-year campaign of harassment” against the Tesla CEO.
“Today’s action is an admission by the SEC that they cannot bring an actual case,” he said. “Musk has done nothing wrong and everyone sees this sham for what it is.”
Spiro added that the lawsuit addresses a mere “alleged administrative failure to file a single form — an offence that, even if proven, carries a nominal penalty”.
Musk also faces a separate lawsuit in Manhattan federal court from former Twitter shareholders, alleging delayed disclosure of his stock purchases.
Musk has argued in that case that it is implausible to suggest he intended to defraud other shareholders, asserting that the delay was a mistake supported by “all indications.”
(With Reuters inputs)
- Location :
Washington D.C., United States of America (USA)
