The US markets watchdog has filed a lawsuit against Elon Musk alleging he failed to disclose that he had amassed a stake in Twitter, allowing him to buy shares at “artificially low prices.”
The Securities and Exchange Commission (SEC) lawsuit alleges that the multi-billionaire Tesla boss saved $150m (£123m) in share purchases as a result.
According to SEC rules, investors whose holdings surpass 5% have 10 days to report that they have crossed that threshold. Musk did so 21 days after the purchase, the filing says.
In a social media post, Musk called the SEC a “totally broken organisation.”
He also accused the regulator of wasting its time when “there are so many actual crimes that go unpunished.”
“Musk’s violation resulted in substantial economic harm to investors,” the SEC complaint said.
In a statement emailed to BBC News, Musk’s lawyer, Alex Spiro, described the lawsuit as a “sham” and “a campaign of harassment” against his client.
Twitter’s share price rose by more than 27% after Musk made his share purchase public on 4 April 2022, the SEC said.
Musk ended up buying Twitter for $44bn in October 2022 and has since changed the platform’s name to X.
The complaint was submitted by the SEC to a federal court in Washington DC on Tuesday.
The lawsuit also asked the court to order Musk to give up “unjust” profits and pay a fine.
The head of the SEC, Gary Gensler, announced in November that he will resign from his role when Donald Trump returns to the White House on 20 January.
That was after Trump said he planned to sack Mr Gensler on “day one” of his new administration.
Under Mr Gensler’s leadership, the SEC clashed with Musk, who is a close ally of the president-elect.
But Musk had run-ins with the SEC long before Mr Gensler took office.
In 2018, the regulator charged Musk with defrauding investors by claiming he had “funding secured” to take Tesla, the electric car company he leads, private.
He later settled the charges, stepping down as chairman of the firm’s board and agreeing to accept what was dubbed a Twitter sitter – limits on what he could write on social media about the company.
By BBC News
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