Musk sued over delayed disclosure of Twitter acquisition
Elon Musk is facing legal action from the US Securities & Exchange Commission (SEC) regarding his 2022 acquisition of Twitter. The SEC alleges that Musk delayed disclosing his ownership interest in Twitter beyond the legally required threshold of 5%. This allowed him to buy additional shares at a lower price, according to the SEC.
The SEC’s investigation found that Musk exceeded the 5% on 14 March 2022. Under US regulations, he was required to disclose this information within 10 business days. However, Musk did not make the required public announcement until 4 April, 11 days after the deadline. Subsequently, the stock price rose 27%.
The SEC claims that Musk’s delayed disclosure resulted in a financial benefit of more than $150 million. Conversely, shareholders who sold their shares during this period suffered losses. The SEC requires Musk to repay the amount gained, along with an additional fine.
Musk’s legal representation claims he acted correctly and accuses the SEC of waging a prolonged campaign against him. The outcome of the legal action remains uncertain.
One notable factor is the upcoming change in leadership at the SEC with the incoming Trump administration. Gary Gensler, the current head of the SEC, has announced his resignation. This development raises the possibility that the lawsuit will soon be dismissed.
Musk acquired Twitter for about $44 billion in October 2022. Most of this amount was funded by the sale of shares in Tesla, the electric vehicle company he heads. Musk also secured loans totaling $12 billion. After the acquisition, he rebranded Twitter as X, his online platform.
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