- SEC sued Elon Musk for delaying disclosure of his 2022 acquisitions of X shares.
- Musk criticized the SEC because the community supported him.
The American Securities and Exchange Commission (SEC) did this indicted Elon Musk. They accuse him of not disclosing his major acquisition of Twitter shares in time in early 2022.
The SEC claims that this delay allowed Musk to secure his stake at an artificially discounted price, saving $150 million.
The late disclosure also affected other investors. They missed the opportunity to sell their shares at potentially higher values, unaware of Musk’s involvement.
Why did the SEC indict Musk?
Under SEC rules, investors who exceed a 5% stake in a publicly traded company must report it within 10 days – a requirement Musk would have exceeded by 11 days.
The SEC claimed to have stated:
“Because Musk failed to disclose his beneficial ownership in a timely manner, he was able to make these purchases from the unsuspecting public at artificially low prices.”
The SEC also added:
“That day, Twitter’s stock price rose more than 27% from the previous day’s closing price.”
For context, the SEC claims that Tesla CEO Elon Musk began acquiring Twitter stock in early 2022. On March 14, he had crossed a 5% ownership threshold.
Between March 24 and April 4, 2022, Musk reportedly spent more than $500 million to buy additional shares, underpaying Twitter investors by more than $150 million.
The regulator claims that Musk’s inability to disclose his ownership in time allowed him to buy shares at artificially low prices. The market was unaware of its significant importance, a material fact that would have affected stock valuations.
This happened days before Gensler’s resignation
Interestingly, the timing of the SEC’s lawsuit coincides with major leadership transitions, as Chairman Gary Gensler prepares to step down on January 20, marking the start of Donald Trump’s presidency.
This period also ties in with Musk’s upcoming role as head of the newly created Department of Government Efficiency (DOGE), where he will advise the new administration on streamlining government operations.
The overlap of these developments adds an intriguing layer to the unfolding legal and political saga surrounding Musk and his involvement with X (formerly Twitter).
As expected, Musk switched to X voice his criticism of the SEC, stating:
“Totally broken organization. They spend their time doing things like this when there are so many real crimes that go unpunished.”
Needless to say, the community was in favor of Musk, as highlighted by an X user who said:
Source: Adam Lowisz/X
Musk’s previous legal battles
Well, this isn’t the first instance of tension between the Biden administration and Musk.
Last year, in August, Musk faced accusations of defrauding investors through Dogecoin [DOGE] manipulation and insider trading, which reportedly resulted in billions in losses.
However, on August 29, U.S. District Judge Alvin Hellerstein ruled dismissed the lawsuit in Manhattanwhich rules in Musk’s favor.
While memecoins like Pepe [PEPE]Shiba Inu [SHIB]and DOGE in particular often rose exponentially after Musk’s tweets, the court found no evidence directly linking him to intentional market manipulation.
Credit : ambcrypto.com
