15th January 2025 – (New York) On Tuesday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk, alleging that he failed to disclose his substantial stake in Twitter, now known as X. The lawsuit claims that prior to completing his $44 billion acquisition of Twitter in October 2022, Musk had begun accumulating a significant number of shares.
By March 2022, Musk had acquired over 5% of Twitter’s common stock, a threshold that mandated disclosure to the SEC within 10 days. The SEC contends that this alleged non-disclosure allowed Musk to buy shares at “artificially low prices,” thereby enabling him to underpay Twitter investors by more than $150 million during this period.
The complaint, filed in a federal court in Washington, D.C., accuses Musk and his wealth manager of withholding crucial information to avoid a spike in Twitter’s stock price. By 25th March, 2022, Musk had increased his stake to 7% by purchasing nearly 3.5 million shares. He subsequently joined Twitter’s board and formally disclosed his stake in early April 2022, by which point he owned over 9% of the company, leading to a more than 27% rise in Twitter’s stock price.
The lawsuit is significant, particularly as Musk faced a deadline last month to settle with the SEC regarding his Twitter buyout. His legal team has alleged “years of harassment” by the agency, which has been investigating Musk’s sale of Tesla Inc. shares and his increasing investment in Twitter before announcing the leveraged buyout in 2022.
In October 2024, the SEC rejected Musk’s offer to pay a nominal $2,923 fine for missing a deposition related to his 2022 Twitter acquisition, instead seeking sanctions against him. Musk has previously condemned the SEC alongside Vivek Ramaswamy, co-leading the “Department of Government Efficiency” in Donald Trump’s administration, labelling the agency a “weaponised institution.” This statement followed a Fifth Circuit Court decision that ruled the SEC had overstepped its authority in approving Nasdaq’s diversity quota policy.
The post SEC sues Elon Musk over alleged non-disclosure of Twitter stake appeared first on Dimsum Daily.
English (US) ·