The Securities and Exchange Commission (SEC) has filed a lawsuit against Tesla CEO Elon Musk, accusing him of defrauding Twitter’s shareholders. The commission claims that Musk failed to file a beneficial ownership report, which disclosed his acquisition of over 5% of Twitter’s outstanding shares in March 2022.
Musk’s late filing allegedly kept Twitter shares at artificially low prices, allowing him to purchase the shares for $150 million less than their worth. This was in violation of SEC rules, which require investors who acquire more than 5% of a company’s registered voting equity shares to disclose their position within 10 days.
The SEC also alleges that Musk falsely represented himself as a passive investor when he actually intended to exert control over the company. By withholding this information from shareholders, Musk committed securities fraud.
Musk refiled his disclosure as an active investor on April 5, after the alleged false representations had already caused Twitter’s stock price to increase by more than 27% over its previous day’s closing price. The SEC is seeking to have Musk pay back his “unjust enrichment” and civil penalties for violating securities laws.
This lawsuit comes in the final days of the commission’s leadership under SEC Chair Gary Gensler, who will step down on January 20. The investigation into Musk’s Twitter share acquisitions and disclosures was launched by the SEC in April 2022, following a similar lawsuit filed by a Twitter shareholder.
Source: https://finance.yahoo.com/news/sec-picks-another-fight-with-elon-musk-as-gary-gensler-exits-160035890.html