Elon Musk faces SEC fraud allegations over Twitter shares
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of fraud in purchasing Twitter (now X) shares in the spring of 2022. The SEC claims that Musk delayed disclosing his holdings, thereby saving at least £121 million at the expense of other shareholders.
The announcement of the SEC's legal action against Musk is making headlines in the American media. The Commission accuses the billionaire of violating "reporting requirements by beneficial owners of shares" under federal regulations when he acquired Twitter in 2022.
Elon Musk sued over Twitter acquisition
On Tuesday, 14 January, the U.S. Securities and Exchange Commission reported that it alleges Musk failed to submit the required report after acquiring more than five per cent of Twitter shares. Rapid reporting of such investments is mandated in the U.S. under the Securities Exchange Act of 1934.
According to the SEC's complaint, Musk saved at least £121 million at the expense of Twitter shareholders. The American commission believes Musk harmed investors who, unaware of his intentions, sold their shares at artificially deflated prices. This pertains to the period from 25 March to 1 April 2022. The SEC indicates that this resulted in "significant economic harm."
In the lawsuit lodged against Musk in the U.S. District Court for the District of Columbia, the commission is seeking, among other things, the return of unjust profits with interest and a civil penalty.
Musk's attorney, Alex Spiro, conveyed to CNN that his client acted appropriately and criticized the SEC's lawsuit as a sign of the commission's inability to present a substantive case. CNN notes that this legal action is among the final moves by SEC chairman Gary Gensler, whom President-elect Donald Trump has pledged to replace. It seems improbable that the incoming SEC leadership will pursue the case against Musk, who has aligned himself with Trump's campaign and committed to supporting his administration further.
Since acquiring Twitter, Musk has substantially altered the platform's operations. One of his initial actions was to lay off 75% of the staff. He also began engaging actively in politics through the platform and relaxed content moderation rules significantly. Additionally, he rebranded the platform as X.
