The U.S. Securities and Exchange Commission (SEC) has taken legal action against billionaire entrepreneur Elon Musk, accusing him of failing to promptly disclose his substantial ownership of Twitter shares in early 2022. According to the SEC, Musk began acquiring Twitter shares at the beginning of the year and by March 2022, had amassed over 5% of the company's stock. The legal dispute centers around Musk's delay in disclosing this key information, which the SEC claims allowed him to underpay for additional shares by at least $150 million.
The SEC filed a lawsuit against Musk in an effort to compel him to testify as part of their ongoing investigation into his acquisition of Twitter. The investigation, authorized by the SEC in April 2022, seeks to determine whether any securities laws were violated during Musk's purchase of Twitter stock and his related statements and SEC filings. Despite legal requirements to disclose his ownership once it surpassed 5%, Musk delayed this disclosure until April 4, 11 days past the deadline.
In April 2022, Musk signed an agreement to acquire Twitter, but later attempted to withdraw from the deal. This move prompted Twitter to sue Musk, ultimately forcing him to complete the acquisition in October 2022. Following the purchase, Musk rebranded the company as X.
The SEC's current chair, Gary Gensler, has announced plans to step down from his position on January 20. This pending change in leadership raises questions about whether the new administration will continue to pursue the lawsuit against Musk. Meanwhile, representatives for both X and Musk have not yet responded to requests for comment on the SEC's legal actions.
