• The SEC has sued Elon Musk, alleging late disclosure of his Twitter stake in 2022 allowed him to purchase shares at artificially low prices.
• Musk’s delayed filing reportedly resulted in a $150M underpayment for Twitter shares, according to the SEC’s federal court filing.

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, alleging he failed to disclose his acquisition of beneficial ownership of Twitter (now X) in early 2022. The SEC claims this delayed disclosure allowed Musk to purchase shares at artificially low prices, underpaying by at least $150 million.

According to the SEC’s January 14 filing in a Washington, D.C., federal court, Musk was required to report his ownership once it exceeded 5% of the company’s stock. The report, due on March 24, 2022, was not filed until April 4, 11 days late. On the day Musk’s ownership was disclosed, Twitter’s stock price surged by over 27%, reflecting the impact of his acquisition on market valuation.

The SEC alleges Musk began buying Twitter shares in early 2022, amassing over 5% of the company’s outstanding common stock by mid-March. Between March 24 and April 4, Musk reportedly spent over $500 million on Twitter shares at prices the SEC claims were “artificially low” due to his non-disclosure.

“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk’s beneficial ownership,” the SEC stated, seeking a jury trial, disgorgement of Musk’s alleged unjust enrichment, and a civil penalty.

Musk has responded dismissively, describing the SEC as a “totally broken organization” in a January 15 post on X. His lawyer, Alex Spiro, called the suit a “ticky-tack complaint” and accused the SEC of engaging in a “multi-year campaign of harassment” against Musk, asserting that the billionaire had done nothing wrong.

This legal action coincides with a period of transition at the SEC, as Chair Gary Gensler is set to step down on January 20 with the inauguration of President Donald Trump. Musk, meanwhile, has been named an advisor to the incoming administration on government efficiency.

Musk, who purchased Twitter for $44 billion in April 2022 and later rebranded it as X, has faced ongoing scrutiny for his management decisions, including large-scale layoffs and relaxed content moderation policies.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.