On Tuesday, January 14, the US Securities and Exchange Commission (SEC) filed a lawsuit against billionaire Elon Musk. The SEC claims that the billionaire committed securities fraud in 2022 by failing to disclose that he had acquired an active stake in Twitter, which allowed him to buy shares at “artificially low prices.” This was reported by UNN with reference to CNBC.
Musk, who is also the CEO of Tesla and SpaceX, acquired Twitter for $44 billion in late 2022 and changed the name to X the following year.
According to the SEC, he delayed the disclosure of his initial purchase of 5% of Twitter shares by more than 10 days. This “enabled him to underpay at least $150 million for the shares he purchased after his financial beneficial ownership report was due.” Investors could have driven up the stock price if they knew about Musk's purchases and his interest in the company.
Last month, Musk announced in a post on the X website that the US Securities and Exchange Commission had issued a “settlement demand,” forcing him to agree to a deal, including a fine, within 48 hours or “face charges on numerous counts” related to the stock purchase.
Musk's lawyer, Alex Spiro, said on Tuesday that the SEC's actions are an admission that “they can't bring a real case.” Spiro added that Musk “did nothing wrong” and called the lawsuit a “sham” and the result of a “years-long harassment campaign” that culminated in a “one-paragraph complaint.
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In a post on the X website after the complaint was filed, Musk called the SEC a “completely broken organization” that focuses “on things like this while there are so many real crimes that go unpunished.
It is noted that Musk, who was one of Trump's main financial supporters in the latter stages of the election campaign, intends to head an advisory group that will deal, among other things, with regulatory cuts, including those affecting various Musk companies.
In July, Trump vowed to fire US Securities and Exchange Commission Chairman Gary Gensler, whose term began in 2021 under President Joe Biden. After Trump's election victory, Gensler announced that he would leave his post. Trump plans to appoint Paul Atkins as the next SEC chairman.
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In a separate civil lawsuit related to the Twitter deal, the Oklahoma Firefighters' Retirement System sued Musk in 2022, accusing him of intentionally concealing his progressive investments in the social network and his intention to buy the company. The pension fund's lawyers argued that Musk, by not disclosing his investments in detail, influenced the decisions of other shareholders and put them at a disadvantage.
The case of Russell v. Musk was filed in April 2022 in the federal court of the Southern District of New York.