The Securities and Exchange Commission sued Elon Musk on Tuesday for allegedly committing securities fraud when he amassed a large share of Twitter stock in 2022 without following disclosure rules.
In a lawsuit filed in federal court, the SEC said Musk did not publicly share that he had amassed a 5% stake in the company prior to his full takeover, allowing him to save “at least $150 million at the expense of Twitter shareholders by failing to timely file the beneficial ownership report.”
Musk ultimately waited 11 days after the deadline to file the required disclosures, the SEC alleges.
“Because Musk failed to timely file a beneficial ownership report with the SEC, he was able to make these purchases of Twitter common stock at artificially low prices from the unsuspecting public,” the SEC said in a statement.
The complaint also alleged that the low prices caused investors “substantial economic harm” when they sold their stock.
The SEC wants Musk to pay a civil penalty and repay investors.
Musk lawyer Alex Spiro said the complaint is a “sham” that shows the SEC does not have an “actual case,” according to Bloomberg.
“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 under Section 13(d) for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty,” he said in a statement.
A 2022 suit similarly accused Musk of delaying his disclosure to keep the stock price down.
The billionaire acquired Twitter for $44 billion in 2022, ending a dramatic saga over the social network’s fate.
He later renamed it X and has since used the platform to support president-elect Donald Trump.
