The US Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of failing to disclose his acquisition of a significant stake in Twitter, now renamed X, in early 2022.
The SEC claims Musk’s delayed disclosure enabled him to buy shares at lower prices, saving at least $150 million. This is according to the SEC’s 14 January 2025 filing in a Washington DC federal court.
Per the filing, Musk allegedly violated securities regulations by not filing a report within 10 days of acquiring more than 5% of Twitter’s stock.
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Musk Disclosed Twitter Stock 11 Days Past Deadline
The SEC contends Musk only disclosed his holdings on 4 April 2022, 11 days past the deadline. On the day of his disclosure, Twitter’s stock price surged by over 27%.
The lawsuit alleges Musk began purchasing Twitter stock in early 2022 .He exceeded the 5% ownership threshold by 14 March. Between 24 March and 4 April, Musk reportedly spent over $500 million on additional shares. Hence, he benefitted from artificially low prices due to the undisclosed information about his ownership.
The SEC argues this failure to disclose deprived investors of critical information and allowed Musk to unfairly profit at their expense.
In response to the lawsuit, Musk dismissed the SEC’s actions as unwarranted. In a post on X dated January 15, he referred to the SEC as a “totally broken organization,” accusing it of pursuing trivial matters while overlooking significant issues.
Totally broken organization.
They spend their time on shit like this when there are so many actual crimes that go unpunished.
— Elon Musk (@elonmusk) January 15, 2025
His attorney, Alex Spiro, characterized the lawsuit as part of a “multi-year campaign of harassment” and claimed it lacked merit.
The SEC’s lawsuit comes at a politically charged moment, as the agency is poised for a leadership change with Chair Gary Gensler stepping down on January 20. Musk is expected to advise incoming President Donald Trump on government efficiency.
Musk, who acquired Twitter for $44 billion on April 25, 2022, made headlines for transforming the platform. He privatized the company, rebranded it as X, and overhauled its operations, including firing top executives and half the workforce.
These changes, along with relaxed content moderation policies, have drawn scrutiny from regulators in regions like Europe and Australia.
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SEC Faces Leadership Change
The SEC faces leadership changes as Gensler announced plans to step down on January 20, and Commissioner Jaime Lizárraga is also set to leave before Trump’s inauguration.
Meanwhile, Donald Trump has selected Paul Atkins, a crypto advocate and former SEC commissioner, as his choice to lead the SEC.
He has also appointed David Sachs, a podcaster, as the “Crypto Czar” in his cabinet. He also pledged to make America the “crypto capital of the world” through initiatives like World Liberty’s lending and borrowing platform.
As reported, the SEC has taken a tougher stance against crypto firms in 2024. More specifically, the regulator imposed nearly $4.7 billion in enforcement actions against crypto companies, a 3,018% increase from 2023.
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