Elon Musk Slams SEC Over Lawsuit Regarding Twitter Stake Disclosure
Elon Musk, the billionaire entrepreneur and CEO of Tesla, has taken aim at the US Securities and Exchange Commission (SEC) for its recent lawsuit concerning his delayed disclosure of a significant stake in Twitter, now known as X.
This legal action represents the culmination of the SEC’s investigation into Musk’s investment activities with the social media platform in 2022.
SEC Allegations
On January 14, the SEC alleged that Musk violated legal requirements by failing to disclose his acquisition of more than 5% of Twitter’s shares within the mandated 10-day period.
The regulatory body pointed out that Musk crossed the 5% threshold by March 14, 2022, but did not file his disclosure until April 4—11 days past the deadline.
According to the SEC’s filing:
“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.”
The SEC claimed that Musk’s disclosure delay saved him over $150 million, deprived other investors of potential gains, and caused economic harm to those who sold their shares during that period.
Notably, the Commission highlighted that Twitter’s stock price surged by 27% after Musk finally revealed his stake, increasing the value of his holdings to $2.89 billion.
The SEC argued that these actions violated the Securities Exchange Act of 1934, which mandates timely disclosures to prevent unfair advantages and safeguard market integrity.
The Commission has requested the court to impose a civil penalty and compel Musk to return the profits allegedly gained through the delayed disclosure.
Musk’s Response
On January 15, Musk took to X to dismiss the lawsuit publicly, criticizing the SEC as an ineffective organization that focuses on trivial matters instead of addressing serious financial crimes.
In his statement, Musk said:
“[The SEC is a] totally broken organization. They spend their time on sh*t like this when there are so many actual crimes that go unpunished.”
Some industry experts have also questioned the SEC’s priorities in this case.
John Reed Stark, a former official in the SEC’s Internet Enforcement division, viewed the investigation as a potential waste of resources. He suggested that Musk’s legal team could argue that his initial intentions were to secure a board seat rather than pursue a complete acquisition of Twitter.
Stark remarked:
“This case seems almost as absurd as the SEC 2008 case against Mark Cuban, and a transparent attempt by Chair Gensler to garner some last-minute headlines days before his exit and to also stick it to President Trump.”
References:
Elon Musk, SEC, Twitter, X