Elon Musk Faces SEC Lawsuit Over Alleged Twitter Stake Concealment

The US Securities and Exchange Commission has filed a lawsuit against Elon Musk, accusing him of failing to disclose a significant stake in Twitter within the required timeframe, leading to substantial financial losses for investors.

In a striking confrontation between the US Securities and Exchange Commission (SEC) and billionaire entrepreneur Elon Musk, the regulatory body has initiated a lawsuit alleging that Musk concealed his substantial ownership of Twitter, allowing him to purchase shares at deceptively low prices. This alleged oversight, according to the SEC, resulted in a financial deficit of approximately $150 million for Twitter's shareholders.

The complaint alleges that following SEC regulations, investors surpassing a 5% ownership threshold must report their holdings within ten days. However, Musk reportedly took 21 days to disclose his stake after accumulating shares, which correlates with a reported surge of over 27% in Twitter’s share price after he publicly revealed his holdings on April 4, 2022. Ultimately, Musk acquired Twitter for a staggering $44 billion in October 2022, subsequently rebranding it as X.

In an aggressive response on social media, Musk dismissed the SEC as a "totally broken organisation" and criticized it for prioritizing what he considers frivolous cases while ignoring severe criminal activities. Musk's legal counsel, Alex Spiro, characterized the lawsuit as a "sham" aimed at harassing Musk and his endeavors.

In addition to seeking the return of “unjust” profits, the SEC's filing calls for financial penalties against Musk. As the lawsuit was filed in a federal court in Washington, DC, it adds yet another chapter to the ongoing tumultuous relationship between Musk and the SEC, a saga that dates back to 2018 when Musk was charged for making misleading statements about Tesla’s privatization plans. Musk settled those charges with an agreement to limit his communications regarding the company on social media.

As SEC chair Gary Gensler announced his upcoming resignation amid political controversy, Musk continues to find himself entwined in ongoing legal challenges with the agency, further complicating his accountability in the rapidly evolving tech industry landscape.