The American Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, the billionaire CEO of Tesla and SpaceX. In 2022, Musk acquired X, then known as Twitter, but he disclosed his intentions to sell the company too late, causing other investors to suffer significant financial losses.
The SEC’s complaint was filed in a Washington court on Tuesday, just a few days before Donald Trump’s inauguration as the 45th President of the United States. Musk is one of Trump’s closest advisors.
This is not the first time Musk has faced legal action from the SEC. For instance, he was involved in a dispute when he expressed his desire to remove Tesla from the stock exchange. The SEC believes that Musk should have disclosed his ownership of 5% of Twitter’s shares in March 2022, which he did not do until April 4th.
By that time, Musk had already increased his stake to 9%. When the news of his ownership became public, the stock price surged by 27%. The SEC argues that other investors were disadvantaged because Musk was able to purchase shares at a lower price during the sharp price increase. They estimate that this disadvantage resulted in a loss of $150 million for investors.
However, Musk has a different perspective. Shortly after announcing his intention to acquire the entire company in April, he also concluded an agreement on the deal on April 25th. Earlier, he had stated that he would purchase shares without taking over the company or influencing the board. The SEC disagrees with this assertion.
Musk’s lawyer maintains that the owner of X did nothing wrong and that any potential offense is minor. He suggests that a fine is sufficient to resolve the matter. In the fall of 2022, Musk ultimately acquired the entire company, paying a total of $44 billion for X.