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https://www.cbsnews.com/news/sec-sues-elon-musk-withholding-info-from-twitter-investors/
SEC sues Elon Musk, accusing him of withholding info that cost Twitter investors millions
The Securities and Exchange Commission on Tuesday filed a lawsuit against Elon Musk, alleging the X owner misled shareholders about his Twitter stock purchases in 2022.
The suit alleges Musk violated federal securities laws, enabling him to purchase shares of Twitter at artificially low prices before his $44 billion takeover of the social media site. Musk has called the SEC "just another weaponized institution doing political dirty work."
Musk started buying shares of Twitter, which he later renamed X, in early 2022. By mid-March, he'd acquired ownership of more than 5% of the company's outstanding stock, according to the SEC filing. He was required to file a report with the SEC disclosing his purchases, but the lawsuit alleges he failed to do so in a "timely" manner, allowing him to underpay other investors by at least $150 million for shares they bought during that period.
Musk waited until April 4, 2022, 11 days after the report was due, to publicly disclose his beneficial ownership in an SEC report, the commission says.
"Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm," the SEC alleges in its suit.
The SEC says it wants the court to order Musk to pay "disgorgement of unjust enrichment as a result of his violation." The SEC is also seeking civil penalties.
Musk responded to news of the suit on X on Tuesday night, calling the SEC a "totally broken organization."
"They spend their time on s--- like this when there are so many actual crimes that go unpunished," Musk wrote.
In a statement late Tuesday night, Musk's attorney, Alex Spiro, told CBS News that "today's action is an admission by the SEC that…they cannot bring an actual case - because Mr musk has done nothing wrong and Everyone sees this sham for what it is."
In July 2022, Musk tried to pull out of the deal to buy Twitter, but the company sued to hold him to their agreement, and he completed the takeover in October of that year.
Musk has tangled with the SEC before. The SEC in 2018 filed a complaint alleging that Musk had misled Tesla investors. In 2023, the SEC said it was seeking a court order to compel Musk to testify as part of its investigation into his purchase of X. He later testified for the investigation.
The SEC lawsuit comes shortly before chairman Gary Gensler's planned resignation from the commission. It's not clear if the new administration will continue the suit. President-elect Donald Trump has selected Paul Atkins as the new SEC head.
Musk is a prominent Trump backer and Republican donor, and has been selected by Trump to lead the Department of Government Efficiency, or DOGE.
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