The U.S. Securities and Exchange Commission has sued billionaire Elon Musk, saying he failed to disclose his ownership of Twitter stock in a timely manner in early 2022, before buying the social media site.
As a result, the SEC alleges, Musk was able to underpay “by at least $150 million” for shares he bought after he should have disclosed his ownership of more than 5% of Twitter’s shares. Musk bought Twitter in October 2022 and later renamed it X.
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Musk started amassing Twitter shares in early 2022, and by March of that year, he owned more than 5%. At this point, the complaint says, he was required by law to disclose his ownership, but he failed to do so until April 4, 11 days after the report was due.
Musk's lawyer, Alex Spiro, said in a statement that the lawsuit “is an admission by the SEC that they cannot bring an actual case" since Musk has “done nothing wrong." He called the lawsuit a “sham.”
"As the SEC retreats and leaves office — the SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tack complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty," Spiro added.
After Musk signed a deal to acquire Twitter in April 2022, he tried to back out of it, leading the company to sue him to force him to go through with the acquisition.
The has SEC said that starting in April 2022, it authorized an investigation into whether any securities laws were broken in connection with Musk’s purchases of Twitter stock and his statements and SEC filings related to the company.
Before it filed the lawsuit, the SEC went to court in an attempt to compel Musk to testify as part of an investigation into his purchase of Twitter.
The SEC's current chair, Gary Gensler, plans to step down from his post on Jan. 20 and it is not clear if the new administration will continue the lawsuit.