SEC sues Elon Musk claiming disclosure failures with Twitter stock

The US Securities and Exchange Commission has sued Elon Musk, claiming he failed to timely file that he “had acquired beneficial ownership” through Twitter stock purchases in 2022.

The SEC said in a Jan. 14 filing in a Washington, DC, federal court that Musk started purchasing Twitter stock in early 2022 and, by March 14, 2022, owned over 5% of Twitter’s outstanding common stock.

“Musk was able to continue purchasing shares at artificially low prices, allowing him to underpay by at least $150 million for shares he purchased after his beneficial ownership report was due,” the regulator claimed.

The SEC alleged Musk failed to file a beneficial ownership report disclosing his Twitter holdings within 10 days after he accumulated more than 5% of Twitter’s stock, doing so 11 days after the report was due on April 4, 2022.

“That day, Twitter’s stock price increased more than 27% over its previous day’s closing price,” the SEC said.

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“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,” it added.

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