Twitter Purchase: SEC Sues Elon Musk

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing the tech billionaire of failing to disclose his ownership of over 5% of Twitter shares in a timely manner before taking control of the company in 2022.

The SEC claims Musk began purchasing Twitter shares in early 2022 and exceeded the 5% ownership threshold by March 14, 2022. Under U.S. securities law, Musk was required to publicly disclose his stake within 10 days, but he did not announce his 9% ownership until April 4—11 days after the deadline.

Following Musk’s delayed disclosure, Twitter’s stock price surged by 27%, according to the SEC’s filing. The agency also found that Musk “underpaid by at least $150 million” for the shares he bought during this period. The SEC argues that shareholders who sold Musk their shares during this time may have incurred financial losses.

The SEC is seeking for Musk to repay the amount he underpaid, along with an additional penalty.

Musk’s lawyer, Alex Spiro, denied the allegations, stating that Musk “has done nothing wrong” and accusing the SEC of waging a “multi-year campaign of harassment” against him.

The future of the SEC lawsuit over the Twitter purchase remains uncertain, as Musk is close to Donald Trump, who will be inaugurated as the U.S. president on January 20. The leadership change in the U.S. government is also expected to bring a shift in the SEC’s leadership, with current chairman Gary Gensler already announcing his resignation.

Musk purchased Twitter in October 2022 for $44 billion and later rebranded the platform as X.
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