In a lawsuit filed just days before the Trump administration took office, the U.S. Securities and Exchange Commission alleges that Elon Musk waited too long to disclose an increase in his stake in the company while preparing a takeover bid, forcing Twitter shareholders to lose their stake. He claimed that he had defrauded the company out of more than $150 million.
The agency’s complaint, which was immediately challenged by Musk’s lawyers, accuses the billionaire of failing to promptly report his accumulation of more than 5 percent stake in the social media platform in early 2022. raise prices.
“Mr. Musk’s failure to timely disclose his beneficial ownership allowed him to make these purchases at artificially low prices from the unsuspecting public,” the regulator said in a civil lawsuit filed in federal court in Washington, D.C. “I was able to do it,” he said. “Investors who sold Twitter common stock during this period suffered significant financial harm because they sold at an artificially low price.”
Musk’s lawyer, Alex Spiro, said the move was because Musk “did nothing wrong and everyone sees this charlatanism as normal” and that the SEC would “not be able to find out what actually happened.” He said it was a “confession” that he could not sue.
“The SEC’s multi-year harassment campaign against Mr. Musk continues with the filing of a single-count complaint against Mr. Musk under Section 13(d) for the administration’s alleged failure to file a single form. culminated in a nominal fine, even if proven.” Spiro said in a statement.
trump supporter
Musk, the world’s richest man, has become one of Donald Trump’s biggest supporters and aides in recent months. The president-elect has tasked Musk, along with Vivek Ramaswamy, with the government’s wide-ranging cost-cutting initiatives. Musk also participated in talks between the president-elect and foreign officials.
Regulators have been investigating Musk’s investments in Twitter since 2022, forcing him to explain why he didn’t disclose his Twitter shares within the correct deadline.
In December, SEC lawyers sent two orders to Mr. Musk to resolve allegations that he did not properly disclose his investment in Twitter, according to a letter sent to the SEC last month seen by SEC lawyers. He asked them to pay more than $1 billion.
Spiro said in the letter that the SEC is seeking relief but is not accusing Musk of acting intentionally or with the intent to mislead investors.
The SEC declined to comment.
“Unjust and punitive”
Spiro said the SEC’s proposed penalty is “inherently inappropriate and punitive.” Spiro said that for similar violations by other individuals, the SEC typically seeks “reasonable” penalties of no more than $100,000.
Musk publicly previewed regulators investigating him in December, posting Spiro’s letter on It has restarted,” he said.
The letter also said the agency was preparing to take action against him over his investments in Twitter. The day before, SEC staff issued a “settlement request requiring Mr. Musk to accept payment within 48 hours or respond to charges in numerous accounts,” the paper said.
Musk has had a tense relationship with the SEC, which accused him of securities fraud in 2018 after he tweeted that he had “secured funding” to take electric car maker Tesla private, leading to a sharp rise in the company’s stock price. sued on charges. Musk agreed to a settlement in the case in which the billionaire and Tesla each paid a $20 million penalty and Musk resigned as chairman.
“Twitter sitter”
The Supreme Court later rejected Musk’s appeal in his “Twitter sitter” case, leaving in place an agreement that required in-house lawyers to pre-approve social media posts about Tesla.
By March 2022, Mr. Musk will have beneficial ownership of more than 9% of Twitter’s outstanding common stock. This created a reporting requirement within 10 days of purchase. Musk filed his report 11 days later, and the company’s stock price rose 27% from the previous day, according to the complaint.
The complaint says Musk repeatedly ignored recommendations to disclose his stake after exceeding the 5% threshold.
The SEC asked the court to direct Musk to pay a civil penalty and return any ill-gotten gains from his stock purchases.
Musk is also facing an investor lawsuit alleging he concealed his acquisition of Twitter stock.
The case is Securities and Exchange Commission v. Musk, 25-cv-00105, U.S. District Court for the District of Columbia (Washington).
–With assistance from Malathi Nayak.
More stories like this can be found at bloomberg.com
©2025 Bloomberg LP
