SEC takes on Elon Musk: Fraud allegations in Twitter buyout
The U.S. Securities and Exchange Commission (SEC) has sued Elon Musk, alleging fraud in purchasing Twitter (now X) shares in the spring of 2022. The SEC accuses Musk of delaying the disclosure of his holdings, thereby saving at least $150 million at the expense of other shareholders.
The announcement of the SEC's lawsuit against Musk is making waves in American media. The Commission accuses the billionaire of violating "reporting requirements by beneficial owners (of shares - ed.) under federal regulations" when acquiring Twitter in 2022.
Elon Musk sued over Twitter acquisition
On Tuesday, January 14, the U.S. Securities and Exchange Commission reported that it alleges Musk failed to file the required report after acquiring more than five percent of Twitter shares. Quick disclosure of such investments is required in the U.S. under the Securities Exchange Act of 1934.
According to the SEC complaint, Musk saved at least $150 million at the expense of Twitter shareholders. The American commission believes Musk harmed investors who, unaware of his plans, sold their shares at artificially deflated prices. This relates to the period from March 25 to April 1, 2022. The SEC mentions that this led to "significant economic harm."
In the lawsuit filed against Musk in the U.S. District Court for the District of Columbia, the Commission seeks, among other things, the return of unjust profits with interest and a civil penalty.
Musk's attorney, Alex Spiro, conveyed to CNN that his client acted appropriately and criticized the SEC's lawsuit as a sign of the commission's inability to present a substantive case. CNN notes that this legal action is among the final moves by SEC chairman Gary Gensler, whom President-elect Donald Trump has pledged to replace. It seems improbable that the incoming SEC leadership will pursue the case against Musk, who has aligned himself with Trump's campaign and committed to supporting his administration further.
Since acquiring Twitter, Musk has significantly changed the platform’s foundations. One of his first moves was to lay off 75% of the staff. He also personally began engaging in politics through the platform and significantly relaxed content moderation rules. He also renamed the platform to X.
