U.S. securities regulators have sued Elon Musk, accusing him of failing to promptly disclose a 2022 purchase of Twitter stock that helped him obtain a discount of at least $150 million on additional stock purchases.
The U.S. Securities and Exchange Commission has accused Musk, one of President-elect Donald Trump's closest allies, of violating U.S. securities laws by failing to promptly disclose his more than 5% stake in Twitter.
Regulators claimed in a civil lawsuit filed in federal court in Washington on Tuesday that Musk bought more than 5% of Twitter stock before March 14, 2022, but did not publicly disclose his ownership until April 4, when he should have 11 days after reporting. The Securities and Exchange Commission said Twitter shares rose more than 27% on the day his stake was reported.
“Musk was able to continue to purchase shares at artificially low prices, which resulted in him underpaying at least $150 million for shares purchased after beneficial ownership reports were due,” regulators said in the complaint.
The alleged violation of securities laws comes as Musk is arranging to acquire Twitter, a deal that will be completed in October 2022 for $44 billion. He has since renamed the social media site X.
The lawsuit marks the SEC's latest broadside against the world's richest man. The agency charged Musk with securities fraud in 2018 in a separate case related to online posts about his electric car maker Tesla. Musk later settled with the SEC but clashed with regulators over the terms of the agreement.
Tuesday's complaint is one of the last enforcement actions led by SEC Chairman Gary Gensler before he leaves office on Jan. 20, the day Trump takes office.
Alex Spiro, Musk's attorney, said: "With the SEC's retreat and departure, the SEC engaged in a years-long campaign of harassment against Mr. Musk, culminating in the filing of A single, difficult complaint..." . . Even if proven, this crime carries a symbolic penalty. "
Spiro added: "Today's action is an acknowledgment by the SEC..." . They couldn't bring an actual case - because Mr. Musk had done nothing wrong and everyone saw the scam for what it was. "
Regulators began investigating the stock purchases in April 2022, according to regulatory filings. That month, the Securities and Exchange Commission sent a letter to Musk asking why he didn't file the proper paperwork by the end-March deadline and why he initially said he would become a passive investor.