SEC sues Elon Musk over alleged securities violations in Twitter acquisition

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk in a federal court in Washington, D.C., alleging securities violations tied to his 2022 acquisition of Twitter, according to Bloomberg.

The lawsuit alleges that Musk failed to disclose his ownership in Twitter after his stake exceeded 5%, a requirement under financial disclosure rules, CNBC reported. The SEC claims this non-disclosure allowed Musk to purchase Twitter shares at “artificially low prices,” saving him at least $150 million.

The SEC had been investigating whether Musk or his associates committed securities fraud in 2022, with a focus on Musk’s sale of Tesla shares and his accumulation of Twitter stock prior to the leveraged buyout of the platform.

In response to the lawsuit, Musk’s attorney, Alex Spiro, strongly denied the allegations, calling the SEC’s case a “sham.” Spiro stated, “As the SEC retreats and leaves office, the SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky-tack complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form—an offense that, even if proven, carries a nominal penalty.”

Last month, Musk stated in a post on X (rebranded from Twitter) that the SEC issued a “settlement demand,” pressuring him to agree to a deal involving a fine within 48 hours or “face charges on numerous counts” related to the share purchase, said CNBC.