Elon Musk is being sued for failing to disclose his purchase of Twitter stocks before buying the company in 2022, which ‘allowed him to underpay’ by at least $150m (£123m).
The world’s richest man started amassing Twitter shares in early 2022, and by March of that year, he owned more than 5%.
The US Securities and Exchange Commission (SEC) has now sued Musk, saying he failed to disclose his ownership of the stocks in a timely manner before buying the social media site in October 2022.
As a result, the SEC alleges, Musk was able to underpay “by at least 150 million dollars” (£123 million) for shares he bought, after he should have disclosed his ownership of the shares.
The SEC says he failed to disclose his holdings until April 4 2022, 11 days after the deadline, by which point he already owned more than 9% of Twitter’s shares.
During the period that he hadn’t disclosed his purchase, Musk bought more than $500m in additional shares, which he was allegedly able to buy from the “unsuspecting public at artificially low prices”.
Twitter’s share price rose more than 27% following his disclosure, the SEC said.
Commenting on a post referencing the lawsuit on X, Musk called the SEC a “totally broken organisation”.
“They spend their time on shit like this when there are so many actual crimes that go unpunished,” the billionaire said.
Alex Spiro, the lawyer representing Musk, reportedly said that his client “has done nothing wrong and everyone sees this sham for what it is”.
After Musk signed a deal to buy Twitter in April of 2022, he tried to back out of it, leading the company to sue him to force him to go through with the acquisition.
The SEC said that in April 2022, it authorised an investigation into whether any securities laws were broken in connection with the purchases of Twitter stock and Musk’s statements and SEC filings related to the company.
Before it filed the lawsuit, the SEC went to court in an attempt to compel Mr Musk to testify as part of an investigation into his purchase of Twitter.
The SEC’s chairman Gary Gensler plans to step down from his post on January 20 and it is not clear if the new administration will continue the lawsuit.
By Josef Al Shemary
