SEC Files Lawsuit Against Elon Musk Over Twitter Share Purchase

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that his purchase of Twitter shares in 2022 violated federal securities laws.

The SEC claims that Musk failed to timely file a beneficial ownership report disclosing his acquisition of more than five percent of Twitter’s common stock in March 2022. This omission allegedly allowed Musk to continue purchasing shares at artificially low prices, resulting in an underpayment of at least $150 million.

Alex Spiro, Musk’s attorney, has dismissed the filing as a “sham” and a culmination of a “multi-year campaign of harassment” against Musk. Musk’s involvement with Twitter, now rebranded as X, has been marked by numerous controversies and legal actions from investors, former employees, and companies with contracts with the social network.

Shareholders have also filed a lawsuit against Musk, accusing him of disclosing his five percent stake in Twitter too late, after the SEC’s deadline.

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Background information

• In early 2022, Elon Musk began purchasing shares of Twitter. By March 14, 2022, he had acquired more than 5% of the company’s outstanding shares.
• According to SEC regulations, Musk was required to disclose this ownership within ten days, but he failed to do so until April 4, 2022. This delay allowed Musk to continue buying shares at lower prices, allegedly saving him at least $150 million.
• The SEC claims that Musk’s late disclosure violated federal securities laws and harmed investors who sold their shares at artificially low prices. The lawsuit seeks to recover the financial gains Musk allegedly made during this period and impose penalties on him.
• Despite the legal challenges, Musk went on to purchase Twitter for $44 billion in October 2022 and later rebranded it as “X”.
• Musk’s involvement with Twitter has been marked by numerous controversies and legal actions from investors, former employees, and companies with contracts with the social network.