The Securities and Exchange Commission (SEC) has sued tech billionaire Elon Musk, alleging he committed securities fraud by failing to disclose his ownership of Twitter.
According to the SEC complaint, filed Tuesday in Washington, D.C. District Court, Musk withheld information that allowed him to underpay for the shares of Twitter he bought “after his financial beneficial ownership report was due.”
The SEC launched an investigation into Musk in April 2022 over his initial purchase of Twitter stock and his various SEC filings related to the social media company.
Before acquiring Twitter, now known as X, for $44 billion in October 2022, Musk had increased his shares in the company.
The SEC requires investors to disclose when they own more than 5 percent of a company. Musk did not disclose any Twitter holdings until April 4, 2022, when he owned more than 9 percent of shares, the complaint said.
“During the period that Musk was required to publicly disclose his beneficial ownership but had failed to do so, he spent more than $500 million purchasing additional shares of Twitter common stock,” the SEC said. “Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low process.”
The SEC alleges that Musk underpaid Twitter’s investors by more than $150 million during that period.
Musk previously criticized the SEC over a settlement offer in the agency’s investigation. In a letter sent last month to SEC Chair Gary Gensler that Musk shared on X, his attorney Alex Spiro said the SEC gave Musk 48 hours to accept a monetary payment or face charges on several counts. Spiro said the agency has harassed Musk for years.
The tech billionaire, who has been named to co-lead President-elect Trump’s “Department of Government Efficiency,” previously sat for two depositions with the SEC but refused to testify for the third time in 2023. He later agreed to testify but skipped his scheduled appearance last September.
After he skipped his scheduled testimony, the SEC said it planned to reprimand the billionaire.
The suit is one of SEC Chair Gary Gensler’s last, as he said he would step down before Trump has the chance to fire him. Trump, who has become close with Musk in recent months, could have Gensler’s replacement, Paul Atkins, pull back on the suit.
The Hill has reached out to Musk’s lawyer, but in a statement to CNBC, Alex Spiro said the action is an admission by the SEC that they can’t “bring an actual case.” He said Musk hasn’t done anything wrong and called the suit a “sham.”
