United States Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, Space X and Tesla Inc. founder, over alleged violations in Twitter acquisation
Gatekeepers News reports that Musk bought Twitter (now X) in October 2022 for $44 billion after acquiring a 9.2 % stake in the social media platform earlier in April the same year.
In a lawsuit filed at a federal court in Washington DC, the SEC alleged Musk failed to disclose his ownership of more than 5 percent of Twitter’s shares on time, hence he was able to purchase the company’s stock at “artificially low prices”.
According to the security agency; Musk was obligated to disclose his increasing stake in the social media platform by March 24, 2022, but he delayed disclosing his 9.2 percent ownership until April 4 of the same year after he bought more shares in the company.
SEC said that during this period, Musk’s failure to report his ownership allowed him to acquire over $500 million in shares at prices that didn’t reflect his influence over the company.
It further stated that when the business magnate eventually made his ownership public, Twitter’s stock surged by more than 27 percent, adding that Musk was underpaid by more than $150 million due to his disclosure delay.
SEC said, “Had Musk and his wealth manager disclosed his ownership as required, the stock price would likely have increased significantly.”
The security agency seeks civil penalties and demands that Musk disgorge any profits gained from the delay.
Additionally, the agency said that Musk’s actions misled investors and violated the principle of transparency, which is central to securities laws.
Reacting in a post on X, Musk dismissed the lawsuit and said the organisation was “totally broken”. He added that the security agency ignores serious crimes and pays attention to trivial issues.