New Delhi: The US securities regulator has accused Elon Musk, the tech billionaire founder and CEO of Tesla and Space X, who just bought Twitter, of failing to disclose he had bought into the social media platform in early 2022. The SEC also pointed out the fact that this delay allowed Musk to acquire Twitter shares at a lower price which cost him at least $150million.
Here’s what happened:
Musk began accumulation of Twitter’s shares in early 2022 and acquired more than 5% stake of the company in March. Technically, he should have reported this in 10 days and did not do this until April 4, or 11 days beyond the time he should have filed it. The SEC says this put Musk in a privileged position, and enabled him to purchase shares from retail investors who did not know how much he held.
The SEC believes that Musk influenced other investors and violated securities laws. They mentioned a damages claim accompanied by a demand for a jury trial and to order that Musk return all ‘unjust enrichment,’ plus some more penalties.
Musk’s lawyer Alex Spiro dismissive of the claims and says that is a sue is as ‘’sham’’ for more details. He claims that Musk didn’t commit any offense and goes on to state that the SEC is overcomplicating an insignificant issue of paperwork. Not only that, but Spiro was able to note that even if all the allegations that were leveled by the SEC are actual then the penalties would still be small.
It’s claimed that the SEC attempted to settle the issue with Musk for $263 million; $178 million was to be dedicated to the potential unjust enrichment, together with the penalties. But Musk’s team deemed the amount unreasonable since there has not been established an intention by Musk to harm the investors.
This litigation is not the first time Musk gets into trouble with the regulators, he suffered previous violations with the SEC over one of his famous tweets. It also arrives as the head of the SEC, Gary Gensler, is expected to depart soon, and it remains unclear if the next administration will continue to pursue the case.
Musk’s purchase of Twitter in October 2022 for $44 billion had its own drama. After initially agreeing to buy the company, he tried to back out, leading Twitter to sue him to finalize the deal. Now, this latest SEC case is yet another twist in the ongoing saga of Musk’s dealings with regulators.
