Elon Musk sued by regulator for 'violating' federal securities law over Twitter stocks
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Elon Musk is being sued by the US Securities and Exchange Commission (SEC) for failing to immediately disclose that he’d acquired a large stake in X, formerly known as Twitter. The 53-year-old tech billionaire, who now owns the social media platform, has been accused of initially acquiring shares in the company worth millions of dollars at “artificially low prices.”.
In the ruling filed on Tuesday by the SEC, the financial regulator claimed the world’s richest man took too long to disclose his initial purchase of shares in violation of investment rules. According to SEC guidelines, investors who acquire at least a 5% stake in a company must publicly disclose their stake. However, Mr Musk’s acquirement wasn’t disclosed until he owned 9.2%.
By failing to disclose his initial acquirement of Twitter shares immediately, the complaint claims Mr Musk then underpaid for subsequent stocks he purchased. The report states: “Elon Musk failed to timely file with the SEC a beneficial ownership report disclosing his acquisition of more than five percent of the outstanding shares of Twitter's common stock in March 2022, in violation of the federal securities laws.”.
The SEC claimed it took Musk 11 days to publicly disclose his ownership stake “allowing him to underpay by at least $150 million for shares he purchased after his beneficial ownership report was due.”. The complaint also claims that once his disclosure of X/Twitter shares was made public, share prices rose over 27%.
