Elon Musk Sued by SEC Over Delay in Disclosing Twitter Stake
By Jonathan Stempel
Elon Musk, the world’s richest person, has been sued by the U.S. Securities and Exchange Commission (SEC) for allegedly violating federal securities laws by waiting 11 days too long to disclose his large stake in Twitter, the social media company he later acquired.
According to a complaint filed in Washington, D.C. federal court, Musk failed to file a required form with the SEC within 10 calendar days of exceeding a 5% ownership threshold in Twitter’s common shares. Instead, he bought an additional $500 million worth of shares at artificially low prices before disclosing his stake on April 4, 2022, by which time he owned a 9.2% stake.
Twitter’s share price rose over 27% after the disclosure, the SEC said. The agency is seeking to force Musk to pay a civil fine and disgorge any profits he obtained as a result of his delayed disclosure.
Musk’s lawyer, Alex Spiro, dismissed the lawsuit as part of a “multi-year campaign of harassment” by the SEC, calling it a “sham” and “an admission that they cannot bring an actual case.” He also argued that the alleged infraction was a minor administrative error and not a serious offense.
This is not the first lawsuit Musk has faced over his Twitter purchases. He has also been sued by former Twitter shareholders in Manhattan federal court, who claim he failed to disclose his stake in a timely manner. Musk has denied allegations of wrongdoing, saying that any delay was likely an error and not an attempt to defraud other shareholders.
Musk, who is also an adviser to U.S. President-elect Donald Trump, is worth $417 billion, according to Forbes magazine, through his businesses including Tesla and SpaceX. He is nearly twice as wealthy as Amazon founder Jeff Bezos, who is the world’s second-richest person at $232 billion, according to Forbes.
