SEC sues Elon Musk for fraud in Twitter stock buy
The U.S. Securities and Exchange Commission (SEC) has sued Elon Musk, accusing him of committing fraud when purchasing Twitter (now X) shares in the spring of 2022. The SEC claims Musk delayed disclosing his holdings, which saved him at least $150 million at other shareholders' expense.
The announcement of the SEC's lawsuit against Musk is making waves in the American media. The Commission accuses the billionaire of violating "reporting requirements by beneficial owners" under federal regulations when he acquired Twitter in 2022.
Elon Musk sued over Twitter acquisition
On Tuesday, January 14, the U.S. Securities and Exchange Commission reported that it alleges Musk failed to file the required report after acquiring more than five percent of Twitter shares. Quick reporting of such investments is required in the U.S. under the Securities Exchange Act of 1934.
According to the SEC complaint, Musk saved at least $150 million at the expense of Twitter shareholders. The commission believes Musk harmed investors who, unaware of his plans, sold their shares at artificially deflated prices. This concerns the period from March 25 to April 1, 2022, leading to what the SEC describes as "significant economic harm."
In the lawsuit filed against Musk in the U.S. District Court for the District of Columbia, the commission seeks, among other things, the return of unjust profits with interest and a civil penalty.
Musk's attorney, Alex Spiro, conveyed to CNN that his client acted appropriately and criticized the SEC's lawsuit as a sign of the commission's inability to present a substantive case. CNN notes that this legal action is among the final moves by SEC chairman Gary Gensler, whom President-elect Donald Trump has pledged to replace. It seems improbable that the incoming SEC leadership will pursue the case against Musk, who has aligned himself with Trump's campaign and committed to supporting his administration further.
Since acquiring Twitter, Musk has significantly changed the platform’s foundations. One of his first moves was to lay off 75% of the staff. He also personally started engaging in politics through the platform and significantly loosened content moderation rules. Additionally, he renamed the platform to X.
