SEC sues Elon Musk over Twitter stock purchase, alleges securities law violation

The SEC alleges Elon Musk failed to disclose his Twitter stock purchases on time, underpaying shareholders.

The SEC has filed a lawsuit against billionaire Elon Musk, alleging securities law violations during his 2022 acquisition of Twitter, now known as X. 

The complaint, filed in U.S. District Court in Washington, D.C., accuses Musk of failing to disclose his ownership of more than 5% of Twitter shares within the required 10-day timeframe.

According to the SEC, Musk’s delayed disclosure enabled him to acquire additional shares at “artificially low prices,” underpaying shareholders by more than $150 million. The agency claims Musk crossed the 5% threshold in March 2022, but only disclosed his holdings on April 4, 11 days late. By then, his stake had grown to over 9%, and Twitter's stock price surged 27% after the disclosure.

Musk, who purchased Twitter for $44 billion in October 2022, has denied wrongdoing. His lawyer, Alex Spiro, dismissed the SEC lawsuit as a “sham” and part of a “multi-year campaign of harassment.” The SEC is seeking a jury trial, requesting disgorgement of profits and a civil penalty.

The lawsuit coincides with Musk’s growing political prominence. As a major backer of President-elect Donald Trump, Musk is poised to lead an advisory group focused on reducing regulatory burdens. Trump has vowed to remove SEC Chairman Gary Gensler, who announced his resignation following the election.

In a related civil suit, the Oklahoma Firefighters Pension and Retirement System has accused Musk of concealing his investments to manipulate Twitter’s stock. The SEC alleges Musk spent $500 million on Twitter shares during the disclosure delay, benefiting at the expense of unsuspecting investors.

This high-stakes legal battle adds to the scrutiny surrounding Musk’s actions during his contentious Twitter buyout.