The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of securities fraud linked to his 2022 acquisition of Twitter, now rebranded as X. The complaint was filed in federal court in Washington, D.C., and alleges that Musk violated disclosure laws while amassing a large stake in the social media company.
Elon Musk Faces US SEC Lawsuit for Securities Fraud
In the SEC’s lawsuit, Elon Musk is accused of acquiring more than 5% of Twitter stock in March 2022. According to the federal regulations, shareholders are expected to report their holdings once they cross this threshold within ten days.
The SEC alleges that Musk failed to disclose this information for 11 days and during this time he was purchasing shares at a lower price to avoid public knowledge.
According to the SEC, Musk’s delayed disclosure let him purchase shares from unsuspecting investors and allegedly saved him more than $150 million. On 4th of April, 2022, Musk made public his investment in Twitter and claimed to have more than 9% of Twitter’s stocks. In the same week, Twitter made an announcement that it would be joining the exchange and its stock price increased by more than 27%.
Legal Team Denies Allegations
The attorney representing Elon Musk, Alex Spiro, said that the SEC complaint is a ‘sham’ and that the SEC is harassing Musk. Spiro said that the case was rooted in a bureaucratic matter and pointed out that “even if it is proven this alleged failure to submit a form has a very limited consequence.”
Musk and the SEC have been in a tense relationship for the past few years with several investigations and legal battles.
The billionaire has earlier on complained to the agency saying that it has been after him. Last month, Musk told X that the SEC had tried to convince him to pay a fine in the case but when he refused the regulator decided to pursue charges. Moreover, the agency has been called out severally for regulation by enforcement with recent lawsuit against Ripple moving forward as both parties submitted a stipulation while agreeing to file a deferred appendix.
US SEC Seeks Financial Penalties
In the lawsuit, the SEC wants the court to order Musk to give up any purported profits from the non-disclosure and also pay civil penalties. The agency is also asking for a jury trial in the case to decide whether or not Musk has violated securities laws.
The lawsuit is the latest in a string of legal battles that Elon Musk has had to deal with since acquiring Twitter in a $44bn deal in October 2022. The acquisition was signed after a long period of negotiations and public confrontation between the parties, including Musk’s attempts to withdraw from the deal due to the presence of bots on the platform.
This follows another lawsuit by the SEC regarding Musk’s acquisition of Twitter Inc. The Oklahoma Firefighters Pension and Retirement System had sued Musk in 2022 for allegedly defrauding investors and untimely revelation of his plan to acquire the company.
According to the pension fund, Musk’s actions impacted other shareholders’ choices and harmed them financially through the lawsuit he filed. That lawsuit, Rasella v. Musk, was filed in a federal court in New York and the case is ongoing.
The SEC’s lawsuit also comes at a time when there are changes in the leadership at the agency. Outgoing SEC Chair Gary Gensler, who has been under pressure from business leaders, including Ripple CEO Brad, said that he will step down at the end of his term, which is on 20th January, after President-elect Donald Trump swearing in. Trump has vowed to cut down on the regulatory mechanisms that may influence the SEC in the future.
The post Elon Musk Faces US SEC Lawsuit for Securities Fraud in Twitter Deal appeared first on CoinGape.
