The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging that he failed to properly disclose his ownership of X, formerly known as Twitter, prior to his acquisition of the platform.
Before acquiring Twitter for $44 million in October 2022 and changing the company’s name to X, Musk started purchasing a number of Twitter shares.
By March 2022, he had acquired over 5% of the company’s common stock, which he was then required to report to the SEC within 10 calendar days.
The filing claimed that Musk did not fulfil this disclosure requirement.
According to the complaint, this oversight allowed Musk to purchase shares at “artificially low prices,” resulting in underpaying Twitter investors “by more than $150 million for his purchases of Twitter common stock during this period.”
The lawsuit also alleges that Musk refused to disclose their Twitter stock purchases because they anticipated that the stock price could increase as a result of the information.
By the end of March 24, 2022, Musk had raised his ownership in the company to over 7%. The following day, he acquired nearly 3.5 million shares, as stated in the lawsuit.
Musk officially joined Twitter’s board and disclosed his ownership stake in the company in early April 2022. But by the time he made this disclosure, he had increased his holdings to over 9% of the company.
“Musk paid significantly less for the shares of Twitter common stock he purchased between March 25, 2022, and April 1, 2022, than if he had timely disclosed,” the suit said.
On December 2024, Musk published a post indicating that the agency demanded him to agree within 48 hours to pay a fine concerning his failure to disclose his initial Twitter share purchases, “or face charges on numerous counts.”