The Securities and Exchange Commission has filed a lawsuit against Elon Musk alleging that in the lead-up to his acquisition of Twitter in 2022, he illegally failed to disclose he’d amassed a large portion of stock in the company ― allowing him to buy more shares of the platform at “artificially low prices.”
The SEC lawsuit, filed Tuesday, says that before the Tesla CEO finalized his $44 million deal to buy Twitter, which he renamed X, he began to buy up shares in the company. By March 2022, when he’d acquired more than 5% of the company’s common stock, Musk was required to report his ownership within 10 days. When he made that report — one day past the deadline — the stock surged by 27%, the SEC’s lawsuit says.
“During the period that Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $500 million purchasing additional shares of Twitter common stock,” the lawsuit says. “Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership of more than five percent of Twitter common stock and investment purpose.”
His failure to comply cost investors millions, the lawsuit alleges.
“In total, Musk underpaid Twitter investors by more than $150 million for his purchases of Twitter common stock during this period,” the complaint reads “Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm.”
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When reached for comment, Musk’s lawyer, Adam Spiro, characterized the lawsuit as a “sham” and a petty effort by outgoing SEC chair Gary Gensler to hurt the tech billionaire.
“The SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk … for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty,” Spiro told HuffPost.