SEC Accuses Elon Musk of Cheating Twitter Investors Out of $150 Million in New Lawsuit

In a recent legal development, the Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk for not disclosing his significant purchase of Twitter shares on time in March 2022.

Before acquiring the entire company, Musk bought a 9% stake in Twitter and neglected to report this within the required 10-day window, breaching federal securities regulations.

The lawsuit, initiated in the US District Court for the District of Columbia, asserts that Musk’s delayed filing allowed him to buy additional shares at lower than fair prices, causing him to underpay by at least $150 million.

When Musk eventually revealed his stake, Twitter’s stock prices surged by 27%, highlighting the impact of his investment on the market.

Musk has contested the SEC’s actions, describing the agency as a politically motivated entity.

His lawyer has also declined a settlement offer that included a fine, opting instead to face the charges in court.

This legal action comes during the final days of the Biden administration, with President-elect Donald Trump having recently nominated Musk for a governmental role.

Changes are on the horizon for the SEC as Chair Gary Gensler is set to depart, and Trump’s nominee, Paul Atkins, is likely to take his place.

Atkins previously expressed a desire to relax SEC disclosure requirements, which could influence the agency’s regulatory approach.

Despite potential changes in administration, the SEC’s rule on prompt disclosure, which Musk is accused of violating, is generally strictly enforced.

The rule is a strict-liability measure, meaning the intent behind the violation doesn’t typically affect the enforcement of the law.

The SEC’s lawsuit seeks a civil penalty and the return of Musk’s gains from the period of non-disclosure, with interest.

This case not only highlights regulatory challenges but also Musk’s ongoing confrontations with federal agencies.