According to existing US laws, Elon Musk, who began buying Twitter shares in March 2022, should have declared the concentration of 5% of the company’s shares in his hands on March 24 of the same year, but he did this 11 days later. Now Musk faces a fine and unjustified profits for this, as the US Securities and Exchange Commission (SEC) filed a lawsuit against the billionaire.
Image source: Unsplash, Joshua Hoehne
The corresponding statement of claim was filed by SEC representatives in Washington District Federal Court this week, as reported by Reuters. According to the prosecution, in the spring of 2022, a delay in disclosing information about his purchase of Twitter shares allowed him to purchase these securities worth more than $500 million at artificially low prices and to the detriment of “unsuspecting shareholders.” Musk disclosed information only on April 4, 2022, when he already owned 9.2% of the shares, although he should have done so upon reaching the 5% threshold. Immediately after the disclosure of this information, Twitter’s stock price soared by 27%.
Musk’s lawyer, Alex Spiro, said the SEC’s lawsuit is the “culmination of a multi-year campaign to harass” his client. According to him, this offense is an administrative offense that deserves a banal fine if Elon Musk’s guilt is proven. The timing for filing the lawsuit was not chosen by chance, because following the inauguration of Donald Trump as President of the United States next week, the leadership of the US Securities and Exchange Commission itself is due to change. Current SEC Chairman Gary Gensler will have to give way to Paul Atkins, who is rumored to be planning to significantly overhaul his predecessor’s policies.
For similar reasons, Musk is being pursued in court by former Twitter shareholders, who predictably missed out on benefits as a result of his delay in disclosing information about the company’s stock concentration in 2022. Musk’s representatives said at the court hearing that the delay was the result of an error, not malice. The SEC has repeatedly filed complaints against Musk on other grounds, so the billionaire’s relationship with this agency can be called “strained,” at the very least.