Elon Musk has been sued by the US markets regulator for allegedly buying Twitter shares at ‘artificially low prices’ after failing to disclose the stake he had amassed before buying the platform.
The Securities and Exchange Commission (SEC) filed a lawsuit against the Tesla CEO on Tuesday and claimed Twitter investors were underpaid $150 million in stock prices as a result of his actions.
Before Musk finalized his controversial $44 million takeover of the once-popular social media platform – which he later renamed X – he began to buy up shares in the company, the lawsuit claims.
After acquiring more than five percent of the business‘ stock in March 2022, Musk had 10 days to report his ownership.
But the SEC’s filing says Musk did not report until 21 days after going beyond that threshold.
The US regulator said Musk’s ‘violation’ had resulted in ‘substantial economic harm to investors’ and in its filing asked the court to order Musk, the richest man on the planet, with a net worth of more than $400 billion, as per Forbes, to pay a fine and return ‘unjust’ profits.
The SEC said Twitter’s share price rose by more than 27 percent after Musk made his share purchase public in April 2022.
“During the period that Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $500 million purchasing additional shares of Twitter common stock,” the lawsuit says.
“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose.”
Musk’s lawyer, Adam Spiro, told the Huffington Post the lawsuit was a ‘sham’ and a petty effort by outgoing SEC chair Gary Gensler to hurt Musk.
“The SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk … for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty,” Spiro said.
In a post to X responding to the SEC, Musk himself called it a ‘totally broken organization’ and accused it of wasting time going after him when ‘there are so many actual crimes that go unpunished’.
The tech billionaire could soon have a say over the running of the SEC when he begins his role as an adviser to US President-elect Donald Trump as part of the newly created Department of Government Efficiency (DOGE), which has been tasked with trimming the US federal budget.
The new department will sit outside government but will offer guidance to the Trump White House, with Musk leading it alongside former Republican presidential candidate Vivek Ramaswamy.
