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8 Feb 2025 20:29
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  •   Home > News > International

    Elon Musk sued by SEC for alleged delay in disclosing purchase of Twitter shares in 2022

    The US Securities and Exchange Commission is suing Elon Musk, the owner of social media site X, alleging the world's richest man held off declaring his substantial purchase of Twitter shares in 2022.


    The US Securities and Exchange Commission (SEC) is suing Elon Musk, alleging he intentionally delayed telling the regulator about his purchase of Twitter shares in 2022 in order to buy more of its stock at lower prices.

    The SEC claimed that Mr Musk — the world's richest man — failed to disclose that he had purchased more than 5 per cent of Twitter's shares in March 2022.

    In a complaint filed at the Federal Court in Washington DC, the SEC said Mr Musk had purchased more than 5 per cent of Twitter's stock by March 14.

    Under US law, investors are required to update the SEC within 10 calendar days once they own more than 5 per cent of a company's stock.

    The SEC alleged that Mr Musk had until March 24 to "inform the investing public and the company" of his share purchase but "failed to do so".

    According to the SEC complaint, Mr Musk did not publicly disclose his ownership with the SEC until April 4 — 11 days after the deadline — by which time he had purchased over 9 per cent of Twitter's stock.

    "That day, Twitter's stock price increased more than 27 per cent over its previous day's closing price," the SEC complaint noted.

    "During the period that Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $US500 million purchasing additional shares of Twitter common stock.

    "He was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk's beneficial ownership of more than five per cent of Twitter.

    "In total, Musk underpaid Twitter investors by more than $US150 million for his purchases of Twitter common stock during this period."

    The legal action by the SEC follows a multi-year investigation by the agency into Mr Musk's stock purchases.

    Mr Musk later made an offer to buy Twitter in April 2022, and acquired the social media site in October for $US44 billion ($61.7 billion).

    He later rebranded Twitter to X in July 2023.

    'Totally broken organisation'

    In an email to Reuters, Alex Spiro, a lawyer for Mr Musk, said: "Mr Musk has done nothing wrong and everyone sees this sham for what it is."

    The SEC has asked the court to order Mr Musk to pay a fine over his disclosure delay, and to return the profits he made from his stock purchases.

    Mr Musk responded to the lawsuit in a post on X, where he called the SEC a "totally broken organisation".

    "They spend their time on shit like this when there are so many actual crimes that go unpunished," he wrote.

    Mr Musk previously appeared to publicly ridicule the SEC and its investigation into his Twitter share purchases in December, by sharing his lawyer's letter to the agency.

    "Oh Gary, how could you do this to me?" he captioned the post, referring to SEC chair Gary Gensler.

    Separately, Mr Musk is facing a class action brought by Twitter investors, alleging he manipulated Twitter stock in the lead up to his purchase of the company.

    Mr Musk is also a strong supporter of incoming US president Donald Trump, and has been appointed to oversee a new department examining government efficiency, alongside entrepreneur Vivek Ramaswamy.

    ABC/Reuters


    ABC




    © 2025 ABC Australian Broadcasting Corporation. All rights reserved

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