The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of improperly disclosing the acquisition of Twitter, now known as X. The lawsuit alleges that the billionaire failed to announce the acquisition of the platform at the right time and in the right manner, thereby managing to buy shares at “artificially low prices.”
The complaint was filed by the SEC in federal court in Washington.
Under SEC rules, investors whose shares exceed 5% have 10 days to report that they have exceeded that threshold. However, Elon Musk reportedly did so 21 days after buying Twitter.
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The SEC lawsuit alleges that this violation of regulations by Elon Musk resulted in significant financial loss for other investors.
"Had Musk and his wealth manager disclosed his ownership, as required, the stock price would likely have increased significantly," the lawsuit states.
By keeping these purchases at low prices, Musk “overcharged Twitter investors by more than $150 million for common stock purchases,” according to the complaint.
By March 24, 2022, Elon Musk had increased his stake in Twitter to more than 7%, according to the lawsuit. The next day, he bought nearly 3.5 million shares and shortly thereafter also expressed interest in acquiring Twitter to members of the board of directors .
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The billionaire joined Twitter's board of directors and officially announced his participation in early April 2022. By the time he revealed his stake, he owned more than 9% of the company.
Musk responded to the SEC's accusations with a post on X, calling it a "completely broken organization." He also accused the regulator of wasting its time when "there are so many real crimes going unpunished."
According to BBC News, Musk's lawyer, Alex Spiro, says this lawsuit is a "fraud" and "harassment campaign" against his client.
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Musk ended up buying Twitter for $44 billion in October 2022 and has since changed the platform's name to X.
Source: www.bbc.com
