The U.S. Securities and Exchange Commission filed a lawsuit against Elon Musk on Tuesday, accusing the owner of X of failing to properly disclose his purchase of Twitter stock before acquiring the social media platform in 2022.

The lawsuit, filed in federal court in Washington, D.C., alleges that Musk was required to file a "beneficial ownership" form with the SEC disclosing that he had owned more than 5% of the company before March 24, 2022. The SEC complaint alleges that Musk began buying Twitter stock at the beginning of this year. As of March 14, Musk owned more than 5% of the company's outstanding shares and was required to disclose the size of his holdings within 10 days. The indictment alleges that Musk's failure to comply caused Twitter's other shareholders to lose at least $150 million because they sold their shares at lower prices without knowing Musk was accumulating company stock.

The complaint alleges that Musk revealed his acquisition plans on April 4, 2022, after he began making plans to join the company's board of directors and consider making an outright purchase of Twitter. After reaching an agreement, Musk completed the acquisition of Twitter for $44 billion at the end of 2022. The company went private the following year, ten years after going public. The company changed its name to X in July 2023.

The complaint alleges that due to the failure to disclose information in a timely manner, Musk purchased more than 6 million additional shares at artificially low prices. In turn, other investors are deprived of the opportunity to sell at a higher price. Had Musk revealed his acquisition spree sooner, Twitter stock would undoubtedly have risen, forcing him to pay higher prices to accumulate shares. As of the time of the disclosure on April 4, Musk owned 9% of the company.

On the day Musk filed the 13G form required by the SEC, the stock rose 27% from the previous day's closing price. Musk made his first public offer to acquire the company on April 13, 2022, and signed an agreement with the company on April 25, 2022.

"At a time when Musk was required to publicly disclose his beneficial ownership but failed to do so, he spent more than $500 million to purchase additional common stock of Twitter. Because Musk failed to timely disclose his beneficial ownership, he was able to artificially These purchases were made at low prices from an unsuspecting public and did not reflect undisclosed material information purposes for Musk’s beneficial ownership of more than 5% of Twitter’s common stock and investments,” the complaint states. During this period, Musk underpaid Twitter investors by more than $150 million for purchases of Twitter common stock. Investors who sold Twitter common stock at artificially low prices during this period suffered substantial financial losses as a result. "

Additionally, the lawsuit alleges that the broker responsible for the purchase warned Musk and his representatives that he was legally required to disclose his purchase.

“In or about late February 2022, the broker repeatedly recommended to Musk’s wealth manager that if Musk became the beneficial owner of at least 5% of Twitter’s outstanding common stock, Musk should make public disclosures required by the federal securities laws. obligation to obtain legal advice on its holdings,” the complaint states. "Neither Musk nor his wealth managers sought or obtained legal advice in February
or March 2022, regarding Musk’s obligation to publicly disclose information under federal securities laws
Twitter Holdings. "

Musk's attorney, Alex Spiro, did not immediately respond to a request for comment.

Musk has had run-ins with the SEC in the past. Long before he acquired Twitter, the committee sought to sanction the billionaire for his comments about his publicly traded electric car company Tesla.

According to TechCrunch, "Musk tweeted on August 7 that he had secured an offer to buy the company privately for $420 per share," according to an SEC complaint filed in September 2018. Funding' lies."

In recent years, Musk has become an influential figure in technology, media and pop culture. Last year, he became an outspoken supporter of President-elect Donald Trump. Trump has appointed Musk and entrepreneur Vivek Ramaswamy to a special commission called Government Effectiveness, which is tasked with streamlining and reducing the size of the federal government.