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The Security and Exchange Commission (SEC) filed a lawsuit against Elon Musk, owner of social media giant X (formerly known as Twitter), on January 14 in a federal court in Washington, D.C., for allegedly failing to disclose his ownership of Twitter stock in early 2022. The lawsuit notes that Musk later acquired shares in the company at "artificially low prices," cutting off other shareholders.
Elon Musk reportedly began amassing Twitter shares in early 2022 and owned more than 5% by March 2022. As per the complaint, Musk was required by law to do a public disclosure but failed to do so until April 2022, after the report was due. Musk then went on to buy Twitter in October 2022 for $44 billion and later renamed it X. The SEC alleges that Musk was able to underpay "by at least $150 million."
Musk's lawyer, Alex Spiro, in a statement, called the lawsuit a "sham," claiming that the SEC "cannot bring an actual case."
"As the SEC retreats and leaves office - the SEC's multi-year campaign of harassment against Mr Musk culminated in the filing of a single-county ticky tack complaint against Mr Musk under Section 13(d) for an alleged administrative failure to file a single form - an offense, that, even if proven, carries a nominal penalty."
SEC's case against Elon Musk was filed in federal court just days before SEC Chair Gary Gensler - is set to leave alongside Joe Biden's administration on January 20.
More about SEC's other lawsuit against Elon Musk
This is not the first time the SEC has reportedly complained about Musk. The agency launched an investigation into Musk and his brother, Kimbal Musk, in 2021, alleging securities fraud and violations of insider trading rules for selling tens of thousands of shares in Tesla.
Musk has also been sued in the Manhattan federal court by Twitter shareholders over the delay in disclosure.
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Before the SEC launched an investigation against Musk in 2021, the organization had sued the Tesla giant in 2018 over his Twitter posts about possibly taking the company private and having secured funding to do so. Musk settled that lawsuit by paying a civil fine of $20 million, agreeing to have Tesla lawyers review some Twitter posts in advance.
The organization also sought sanctions against Elon Musk after he skipped court-ordered testimony in September 2024 in relation to a Twitter probe to attend the launch of SpaceX's Polaris Dawn Mission.
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