Elon Musk, embattled CEO of Tesla and SpaceX, has been slapped with a lawsuit by the US Securities and Exchange Commission (SEC). The complaint, filed in Washington DC, accuses Musk of flouting federal securities laws by withholding crucial information of his Twitter acquisition in a timely fashion.
The SEC argues that Musk sought to accrue a substantial position in Twitter at a lower cost by intentionally delaying disclosure. According to the SEC, the Twitter acquisition arose on March 24, 2022, when Musk’s holdings surpassed the 5% threshold. However, he only filed the beneficial ownership report on April 4, 2022, 11 days late and a time during which his Twitter stake inflated from 5% to 9%.
The SEC claims that this delay and subsequent stock surge, a 27% increase upon declaration, allowed Musk to underpay for his Twitter stake by an estimated $150 million. The lawsuit proposes that Musk relinquish any unjustified profits and pay an additional civil penalty. The SEC’s allegations, however, are subject to court’s discretion.
Musk’s attorney, Alex Spiro, has dismissed the lawsuit as an unsubstantiated attack on his client, referring to it as an “admission” that the SEC can’t file an “actual case.” Expected regulatory changes, with Paul Atkins, a nominee friendly to the Trump administration, may offer Musk some respite in future proceedings.
Original source: Read the full article on TechCrunch
