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The SEC is suing Musk, alleging a failure to properly disclose Twitter ownership

The SEC filed a lawsuit against it Elon Musk Tuesday, accusing the billionaire of committing securities fraud in 2022 by not disclosing that he had accumulated an active stake in Twitter, a secret that allowed him to buy shares at “artificially low prices.”

Musk, who is also the CEO of Tesla and SpaceX, I bought Twitter for $44 billion by the end of 2022 and changed its name to X the following year. Before the acquisition, he had built a position in the company of more than 5%, which would require him to disclose his participation to the public within 10 calendar days of reaching that limit.

According to the SEC’s civil complaint, filed in the United States District Court in Washington, DC, Musk was more than 10 days late in reporting that material information, “allowing to pay underwriters of at least $150 million for the shares which he acquired after his financial property report was due.”

The SEC had been to investigate if Musk, or anyone else working with him, committed securities fraud in 2022 as Tesla The CEO sold shares in his car company and increased his stake in Twitter before his leveraged buyout. Moss he said in a post on X last month that the SEC issued a “settlement demand,” pressuring him to accept a settlement that includes a settlement within 48 hours or “face charges on numerous counts” regarding the stock purchase .

Musk’s lawyer, Alex Spiro, said in an emailed statement on Tuesday that the SEC’s action is an admission that they “can’t make a proper case.” He added that Musk “has done nothing wrong” and called the suit a “sham” and the result of a “multi-year campaign of harassment”, culminating in a “single tak ticky tak complaint”.

Musk is just a week away from having a potentially influential role in government, as president-elect By Donald Trump the second term begins on January 20. Musk, who was a major financial backer of Trump in the latter stages of the campaign, is set to lead an advisory group that will focus in part on reducing regulations, including those affecting Musk’s various companies.

In July, Trump promised to fire the chairman of the SEC Gary Gensler. After Trump’s election victory, Gensler announced that he would resign from his post instead.

In a separate civil lawsuit related to the Twitter deal, the Oklahoma Firefighters Pension and Retirement System sued Musk, accusing him of deliberately concealing his progressive investments in the social network and the intention to buy the company. Lawyers for the pension fund argued that Musk, by failing to clearly disclose his investments, had influenced the decisions of other shareholders and put them at a disadvantage.

The SEC said Musk crossed the 5% ownership mark in March 2022 and would have been required to disclose his holdings by March 24.

On April 4, 2022, eleven days after a report was due, Musk finally publicly disclosed his beneficial ownership in a filing with the SEC, disclosing that he had purchased more than nine percent of Twitter’s outstanding stock. ,” the complaint says. “That day, Twitter’s stock price rose more than 27% over the previous day’s closing price.”

The SEC says Musk spent more than $500 million to buy more Twitter stock during the time between the required disclosure and the day of his actual filing. That allowed them to buy stock from the “unsuspecting public at artificially low prices,” the complaint says. He “underpaid” Twitter shareholders by more than $150 million during that period, according to the SEC.

In the complaint, the SEC is seeking a jury trial and asking that Musk be forced to “pay for his unjust enrichment” as well as a civil penalty.

For a short period in April 2022, after his ownership had been made public and it was known that he was the largest shareholder, Musk would have joined the board of Twitter. However, he quickly abandoned this plan, saying to the board he didn’t take a seat.

What followed was a six-month drama that began with Musk submitting an unsolicited offer in mid-April that was opposed by the board. Twitter’s board eventually accepted Musk’s offer later that month. Soon after, Musk tried to back it up, accusing Twitter of misrepresenting the number of “bots” on its service.

Musk ultimately closed the deal in October 2022, famously walking into the company’s office in San Francisco with a sink in hand.

“Enter Twitter HQ – let it sink in!” Moss he wroteattaching a video of his entrance.

This story is unfolding.




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2025-01-15 00:12:00

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