The US SEC has accused tech mogul and leading Dogecoin supporter Elon Musk of failing to promptly disclose his stake in social media company Twitter (now X).
In a Tuesday statementThe SEC claimed that Musk violated beneficial ownership reporting requirements under the Securities Exchange Act of 1934 when acquiring Twitter in 2022.
For context, Musk spent a whopping $44 billion to acquire Twitter in 2022, then renamed the platform X. Before closing 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 more than 5% of Twitter stock as of March 2022, failed to timely report his holdings by March 24, 2022. He then acquired an additional $500 million worth of Twitter stock between March 25 and April 1. 2022.
According to the complaint, Musk acquired these shares at lower prices by failing to timely disclose his initial 5% stake. The complaint alleged that this untimely disclosure saved Musk $150 million, thereby causing economic harm to investors.
The SEC filed its complaint in the U.S. District Court for the District of Columbia, seeking an injunction, restitution of the $150 million and interest. The commission also wants the court to impose a civil penalty on Musk for violating beneficial ownership reporting requirements.
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, such as the case against him, instead of real crimes that continually go unpunished.
His lawyer, Alex Spiro, also responded to the lawsuit in a statement to The Associated Press, calling the case a “sham.” Spiro said Musk committed no crime, pointing to the lawsuit as the SEC’s failure to bring real action against him.
The recent filing comes days before SEC Chairman Gary Gensler officially resigned on January 20.
Recent Lawsuits Against Musk
Notably, this latest lawsuit adds to a series of enforcement actions that the SEC has taken against Musk. Recall that the commission sued Musk in 2018 for making false statements about the privatization of his electric car company Tesla.
In 2023, the SEC continued Musk in a San Francisco court to force him to comply with ongoing investigations into his purchase of Twitter.
The American billionaire has also faced several legal actions from different entities. One major case involves crypto, in which a group of investors sued Musk in 2022 over his support of Dogecoin.
They alleged that Musk manipulated the price of Dogecoin via his bullish tweets about the asset. However, U.S. District Judge Alvin Hellerstein rejected the trial in August 2024 for lack of admissible evidence.
At the same time, the SEC’s recent lawsuit against Musk is unlikely to continue under the new administration. Musk was instrumental in the re-election of Donald Trump, to the President-elect of the United States. appoint him as head of the Department of Government Effectiveness (DOGE), which focuses on reducing federal government spending.
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