The Securities and Exchange Commission filed a lawsuit against Elon Musk on Tuesday for alleged securities violations related to the acquisition of Twitter, now called X. The SEC claims Musk failed to disclose his 5% ownership stake in Twitter on time, a federal violation. securities law, according to the complaint filed in federal court in Washington DC. The SEC said Musk waited to announce the acquisition so he could build a bigger position in Twitter at a discounted price. The lawsuit came during Gary Gensler’s last week as SEC chairman, before he resigned on January 20. Gensler and Musk have had several spats over the past four years, including just last month when Musk mocked a settlement offer from the SEC office. at X. However, Musk could face friendlier SEC commissioners in just a few weeks when Trump’s nominee takes office. The SEC complaint said Musk announced the Twitter acquisition 11 days late. After buying more than 5% of Twitter – which Musk allegedly did on March 24, 2022 – he was asked by the SEC to file a beneficial ownership report. He filed the report on April 4, 2022, according to the SEC complaint. During this period of delayed disclosure, Musk allegedly increased his position in Twitter from a 5% stake to a 9% stake. The day Musk announced the acquisition with the SEC, Twitter’s stock price rose 27% from the previous day’s closing price. The SEC claims this allowed Musk to underpay his shares in Twitter by more than $150 million. In the complaint, the SEC proposed that Musk must return the ill-gotten gains, and pay additional civil penalties. Ultimately, a federal court will decide whether the SEC’s allegations have merit, and determine whether Musk should be fined. Musk’s attorney, Alex Spiro, called the complaint an “admission” that the SEC can’t bring a “real case,” in a statement to Bloomberg on Tuesday. “As the SEC resigned and left office, the SEC’s multi-year campaign of harassment against Mr. Musk culminated in filing a ticky complaint against Mr. Musk,” said Spiro to Bloomberg. In a December post on X, Musk shared a letter from Spiro that matched the same record, also referencing “years of harassment” from the SEC. The letter rejected a settlement offer from the SEC in this case. To fill Gensler’s role, President-elect Donald Trump nominated Paul Atkins, who served as SEC Commissioner during the Bush administration and is expected to be friendlier to Trump allies. Today, Musk is as close to Trump as anyone, and X owners could face a different regulatory regime in just a few weeks.
