The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk on Tuesday, accusing him of failing to properly disclose his early ownership stake in Twitter, now known as X, in violation of federal law. The suit alleges this delay allowed Musk to acquire shares of the company at “artificially low prices.”
According to the SEC, Musk began purchasing Twitter shares in early 2022, surpassing a 5% ownership threshold by mid-March. Federal regulations required Musk to disclose this milestone within 10 days. However, the SEC claims Musk delayed disclosure until April 4, 2022, weeks after he had already increased his stake to more than 7% of Twitter’s common stock.
The lawsuit, filed in a federal court in Washington, D.C., alleges that Musk “underpaid Twitter investors by more than $150 million” during this period. It also states that Musk spent over $500 million acquiring shares between March 25 and April 1, 2022.
“Musk paid significantly less for the shares he purchased during this time than if he had disclosed his stake as required,” the SEC said, adding that Twitter’s stock price jumped over 27% after Musk finally disclosed his position in early April.
Musk’s lawyer, Alex Spiro, dismissed the allegations, calling the lawsuit “a ticky-tack complaint” and an “admission by the SEC that they cannot bring an actual case.” Spiro insisted Musk had “done nothing wrong” and accused the agency of a “multi-year campaign of harassment” against the Tesla and SpaceX CEO.
The lawsuit comes as SEC Chairman Gary Gensler prepares to step down following President-elect Donald Trump’s plans to replace him. It remains unclear whether the incoming SEC leadership will pursue the case. Musk, a known Trump ally, is poised to take on a prominent role in the new administration as co-head of the Department of Government Efficiency.
The SEC has scrutinized Musk for years, particularly regarding his actions as head of Tesla and SpaceX. Most recently, the commission investigated his failure to appear for testimony in an ongoing probe into his Twitter acquisition.
The outcome of this legal battle could hinge on the SEC’s leadership transition and Musk’s influence in the new administration.
