Buying Twitter shares
US Securities and Exchange Commission sues Elon Musk
Before Elon Musk bought Twitter, he purchased shares in the platform. Musk reported these purchases to the US Securities and Exchange Commission too late. However, the anger over this could be short-lived.
The US Securities and Exchange Commission has sued billionaire Elon Musk for alleged violations in connection with the purchase of shares in the short message service Twitter in 2022. Musk “failed to timely disclose to the SEC (…) his acquisition of more than five percent of Twitter’s outstanding common shares in March 2022,” the agency said in court documents published on Tuesday. This constitutes a “violation of federal securities laws.”
This allowed Musk to pay “an artificially low price.” The entrepreneur saved “at least $150 million” when buying Twitter shares.
In October 2022, after months of back and forth, Tesla boss Musk took over the Internet platform Twitter, which is now called X. Since the beginning of 2022, he had started buying Twitter shares on the market. The SEC points out in the complaint that its shareholding reached five percent on March 14, 2022. According to US rules, he would have had to make this public within ten calendar days. However, Musk only announced on April 4th – eleven days too late – that he already held nine percent. The stock price then jumped 27 percent, the SEC pointed out.
Lawsuit against Elon Musk could be dropped again
The agency analyzed Musk’s purchases and concluded that he got off more than $150 million cheaper as a result of the late mandatory disclosure. However, the shareholders who sold their shares to him during this time would have suffered financial damage. The SEC is demanding that Musk repay the sum – plus an additional penalty.
Musk’s lawyer Alex Spiro countered that the tech billionaire “did nothing wrong.” In a statement to the financial service Bloomberg, he also spoke of a years-long “campaign” by the SEC against Musk.
It is unclear how the lawsuit will proceed. Musk is a close confidant of Donald Trump, who will be sworn in as the next US president on January 20th. With the change in the White House, the SEC will also have new leadership. The previous boss, Gary Gensler, has already announced his retirement that day. It is therefore conceivable that the lawsuit may soon be dropped.
Musk spent a total of around $44 billion on the purchase of Twitter, which was completed in October 2022. For the majority of the sum, he sold his shares in the electric car manufacturer Tesla, which he runs. Musk also took out loans worth around twelve billion dollars. After the acquisition, he converted the service into his online platform X.
AFP · DPA
cl
Source: Stern
