The U.S. SEC has charged tech mogul and major Dogecoin supporter Elon Musk with failing to promptly disclose his stake in social media company Twitter (now X).
In a Tuesday statement, the SEC claimed Musk violated the beneficial ownership reporting requirements under the Securities Exchange Act of 1934 while acquiring Twitter in 2022.
For context, Musk splashed a whopping $44 billion to acquire Twitter in 2022 and later renamed the platform to X. Prior to completing the deal, Musk, the owner of Tesla, went on an accumulation spree to increase his Twitter shares.
SEC Complaints
The complaint alleged that Musk, who owned over 5% of Twitter’s stock in March 2022, failed to report his holdings in a timely manner by March 24, 2022. He subsequently acquired another $500 million worth of Twitter stock between March 25 and April 1, 2022.
According to the complaint, Musk acquired these stocks at lower prices by failing to disclose his initial 5% holdings on time. The complaint alleged that this untimely disclosure helped Musk save $150 million, causing investors economic harm.
The SEC filed its complaint in the U.S. District Court for the District of Columbia, seeking injunctive relief, disgorgement of the $150 million, and interest. The commission also wants the court to impose a civil penalty against Musk for violating the reporting requirements for beneficial ownership reporting.
Musk Responds
Responding to the allegation, Musk referred to the SEC as a “totally broken organization.” He further criticized the commission for “wasting its time” on trivial matters, like the lawsuit against him, instead of actual crimes that continuously go unpunished.
His lawyer, Alex Spiro, also reacted to the lawsuit in a statement to the Associated Press, calling the case a ‘sham.’ Spiro said Musk has not committed any crime, highlighting the lawsuit as the SEC’s failure to bring an actual case against him.
The recent filing comes a few days before SEC Chair Gary Gensler officially resigns on January 20.
Recent Lawsuits Against Musk
Notably, this latest lawsuit adds to a series of enforcement actions the SEC has brought against Musk. Recall that the commission sued Musk in 2018 for making false statements about taking his electric car company Tesla private.
In 2023, the SEC sued Musk in a San Francisco court to compel him to comply with its ongoing investigations into his Twitter purchase.
The American billionaire has also faced several legal actions from different entities. One major case relates to crypto, in which a group of investors sued Musk in 2022 due to his support for Dogecoin.
They alleged that Musk manipulated the price of Dogecoin via his bullish tweets about the asset. However, U.S. District Judge Alvin Hellerstein dismissed the lawsuit in August 2024 for lacking admissible evidence.
Meanwhile, the SEC’s recent lawsuit against Musk will unlikely continue under the incoming administration. Musk was instrumental in Donald Trump’s reelection, with the U.S. President-elect appointing him to head the Department of Government Efficiency (D.O.G.E), which focuses on reducing the federal government’s expenses.
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