The US Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk. It claims Musk hid his Twitter stock purchases, buying shares at artificially low prices.
Delayed Disclosure of Stock Holdings
According to SEC rules, investors must disclose holdings over 5% within 10 days. Musk, however, waited 21 days to make this disclosure. This delay helped him save at least $150 million by buying shares at lower prices.
Details of the Allegations
The SEC says Musk directed his wealth manager to buy Twitter stock in large blocks starting in January 2022. The manager was instructed not to exceed a 5% stake. However, by March 2022, Musk had surpassed 5% of the shares, which required a filing. Instead of reporting, Musk continued purchasing shares until he owned over 8% by March 25, 2022.
Musk’s Actions and Conversations with Twitter Board
Musk allegedly discussed his stock holdings with Twitter board members. He showed interest in taking the company private. The SEC argues that Musk’s failure to disclose his stake misled the market, undervaluing Twitter stock.
Market Impact and Legal Consequences
The SEC claims that Musk’s delayed filing hurt investors. They sold shares before the market adjusted to the new information. The SEC now seeks to make Musk return “unjust” profits and pay a fine.
Musk’s Reaction to the Lawsuit
Musk responded on X, criticizing the SEC as a “totally broken organisation.” He accused the agency of focusing on minor issues while ignoring more serious crimes.