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SEC Targets Elon Musk in Major Legal Battle

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  • The SEC has filed a lawsuit against Elon Musk for not disclosing his stake in Twitter, allowing him to buy shares at “artificially low prices.”
  • Musk’s lawyer, Alex Spiro, has dismissed the SEC’s action as a “sham” and part of a “multi-year campaign of harassment.”
  • The SEC’s complaint seeks a jury trial and demands Musk to pay for “unjust enrichment” and a civil penalty.

In a significant legal move, the Securities and Exchange Commission (SEC) has taken action against Elon Musk, accusing the billionaire of breaching securities law. The core of the allegation is Musk’s failure to disclose his active stake in Twitter, which allegedly allowed him to acquire shares at prices that were not reflective of their true market value.

The civil complaint, filed in the U.S. District Court in Washington, D.C., outlines that Musk did not reveal his ownership of over five percent of Twitter shares within the mandated 10-day period. This omission, as per the SEC, resulted in Musk underpaying for Twitter shares by at least $150 million.

Elon Musk, known for his leadership roles at Tesla and SpaceX, completed the acquisition of Twitter for $44 billion in late 2022. He later rebranded the company to X. The SEC’s filing emphasizes that Musk’s delay in reporting his significant ownership information could have impacted investor behavior, potentially leading them to increase the stock’s value had they been informed of his interest.

Musk’s legal representative, Alex Spiro, has vehemently criticized the SEC’s lawsuit. Spiro described the action as a “sham” and attributed it to a “multi-year campaign of harassment,” asserting that Musk “has done nothing wrong.”

This lawsuit emerges on the cusp of President-elect Donald Trump’s second term, with Musk set to play a pivotal role in an advisory capacity for the Trump administration. Notably, Trump, who received considerable financial support from Musk during his campaign, has expressed intentions to dismiss current SEC chairman Gary Gensler. Following Trump’s victory, Gensler announced his resignation, and Trump plans to appoint Paul Atkins as the new SEC chair.

This is not Musk’s first legal entanglement concerning his Twitter acquisition. In a previous case, the Oklahoma Firefighters Pension and Retirement System accused Musk of intentionally hiding his growing investments in Twitter, thus disadvantaging other shareholders.

The SEC’s current complaint seeks a jury trial and demands that Musk be compelled to “pay disgorgement of his unjust enrichment” along with a civil penalty. This development is the latest in a series of events that began in April 2022, when Musk’s stake in Twitter became public, and he briefly considered joining the board before retracting the idea.

Musk’s history with the SEC includes a notable 2018 incident where he faced charges for making “false and misleading” statements about taking Tesla private. That case concluded with Musk and Tesla each paying $20 million in fines, and Musk stepping down as Tesla’s chairman temporarily.

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1 Comment

1 Comment

  1. Restorefreedom

    January 16, 2025 at 8:05 pm

    Law fare

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