The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing the billionaire of violating securities laws by failing to disclose his ownership of more than 5% of Twitter’s stock within the required timeframe. The lawsuit alleges that Musk’s delayed disclosure allowed him to purchase additional shares at lower prices, resulting in financial harm to other investors.
According to a January 14 filing in a Washington, D.C., federal court, Musk started buying Twitter stock in early 2022 and surpassed the 5% ownership threshold by March 14 of that year. However, he did not disclose his beneficial ownership until April 4, 2022—11 days after the legal deadline.
The SEC claims that Musk’s late filing allowed him to buy Twitter shares at “artificially low prices,” saving him at least $150 million while spending over $500 million on additional purchases during that period. The commission further alleged that once Musk disclosed his stake, Twitter’s stock price surged by more than 27%, indicating the impact of his ownership revelation.
Musk Responds to the SEC Lawsuit
In response to the lawsuit, Musk criticized the SEC in a January 15 post on X (formerly Twitter), calling the agency a “totally broken organization” that focuses on trivial matters instead of addressing significant crimes.
Musk’s lawyer, Alex Spiro, also denounced the lawsuit, describing it as a “single-count ticky-tack complaint” and part of the SEC’s “multi-year campaign of harassment” against Musk. Spiro stated, “Mr. Musk has done nothing wrong, and everyone sees this sham for what it is.”
The SEC’s Legal Demands
The SEC is seeking a jury trial, with demands for Musk to forfeit his alleged financial gains through “disgorgement of unjust enrichment” and pay a civil penalty. The lawsuit marks a continuation of the regulatory scrutiny Musk has faced in recent years, particularly concerning his public statements and business dealings.
Background and Broader Context
Musk finalized his $44 billion acquisition of Twitter on April 25, 2022, taking the company private and renaming it X. Since then, he has implemented controversial changes, including firing top executives, cutting half of the workforce, and rolling back misinformation content policies. These actions have subjected the platform to heightened regulatory scrutiny, especially in Europe and Australia.
The lawsuit comes just days before the SEC undergoes a leadership transition, with Chair Gary Gensler stepping down on January 20 as Donald Trump assumes the presidency. Musk is reportedly expected to advise the incoming administration on government efficiency matters.
