Tuesday, 02 January 2024 12:17 GMT

US market watchdog takes legal actions against Elon Musk


(MENAFN) The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of failing to promptly disclose his Acquisition of a significant stake in Twitter in early 2022. The SEC claims that Musk’s ownership surpassed the 5% threshold on March 24, 2022, which legally required him to disclose the stake within ten days. However, Musk did not file the disclosure until April 4, 2022, during which time he continued purchasing shares from investors who were unaware of his growing involvement.

The SEC argues that this delay allowed Musk to acquire Twitter shares at artificially low prices, causing financial harm to investors who sold their shares at reduced values. The regulatory body is seeking to recover these alleged profits, as well as impose civil penalties.

Musk’s lawyer, Alex Spiro, dismissed the lawsuit, calling it part of a long-running “campaign of harassment” and labeling it a “sham.” Spiro suggested that the SEC's action was based on a minor administrative error rather than a substantial legal case.

This new lawsuit comes amid leadership changes at the SEC, with outgoing Chair Gary Gensler initiating the case before being succeeded by Paul Atkins, a Trump appointee. It remains unclear whether Musk’s connections to the incoming administration could affect the case.

Musk ultimately completed the $44 billion acquisition of Twitter in October 2022 after months of legal disputes and public back-and-forth, later rebranding the platform as X.

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