The U.S. Securities and Exchange Commission (SEC) is suing Elon Musk, accusing him of committing securities fraud by failing to disclose a stake in Twitter back in 2022.
In its lawsuit, the SEC claims that keeping his stake in Twitter a secret allowed Musk to buy shares in the then publicly traded social media company at “artificially low prices.”
Musk has since bought Twitter for $44 billion U.S., taken the company private, and rebranded it as X.
However, prior to acquiring Twitter, Musk built up a position in the company of greater than 5%, which would’ve required him to disclose his holdings to the public.
According to the SEC’s civil lawsuit, Musk delayed reporting his stake in Twitter while he bought more shares in the company, “allowing him to underpay by at least $150 million…”
The Wall Street regulator states in its lawsuit that other investors may have bid up Twitter’s stock had they known about Musk’s share purchases and interest in the company.
Musk, who is also chief executive officer (CEO) of electric vehicle maker Tesla (TSLA), has disputed the SEC’s claims on social media.
Musk’s lawyer, Alex Spiro, has said that his client “has done nothing wrong” and called the lawsuit brought by the SEC a “sham.”
In its complaint, the SEC said that it is seeking a jury trial and asks that Musk be forced to “pay disgorgement of his unjust enrichment” as well as a civil penalty.
Twitter/X is now a privately held company and its stock does not trade on a public exchange.
