SEC Lawsuit Claims Elon Musk Cheated Twitter Shareholders Out of $150 Million

According to report, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit alleging that Elon Musk, the billionaire founder of Tesla and SpaceX, cheated Twitter shareholders out of more than $150 million by delaying the disclosure of his growing stake in the company as he prepared to launch a takeover bid. The lawsuit, which was filed just days before the Trump administration took office, adds to Musk's long-running tension with the SEC, particularly regarding his role in taking Twitter private.

The SECs Allegations

According to the SEC's complaint, Musk violated securities laws by failing to notify the public promptly about his growing stake in Twitter. The Commission claims Musk accumulated a large number of Twitter shares between January and March 2022, eventually leading to an ownership stake above 5%, a threshold that would have required him to disclose the purchase within 10 days under federal regulations.

Instead, Musk allegedly delayed making the required filing, thus allowing him to accumulate even more shares at a lower price before he ultimately announced his plans to acquire the company in April 2022. By failing to disclose his stake promptly, Musk allegedly misled Twitter investors, artificially inflating the stock price and depriving them of a chance to make informed decisions about their holdings.

The SEC claims this delay resulted in Twitter shareholders losing out on more than $150 million in potential profits. If Musk had disclosed his growing stake on time, shareholders could have potentially sold their shares at a higher price during the period when Musk was gradually accumulating them.

Musks Defense

Musk‘s legal team quickly responded to the SEC’s lawsuit, asserting that the billionaire did nothing wrong and that the SEC‘s case was without merit. Musk’s attorney argued that the SEC was engaging in a baseless attack, claiming that Musk had not violated any securities laws by waiting to disclose his stake. The lawyer insisted that Musk‘s actions were perfectly legal and that the SEC’s claims lacked sufficient evidence to warrant a lawsuit.

Musk himself has made no public statement regarding the latest lawsuit, but he has a history of contentious interactions with the SEC. In 2018, the SEC sued Musk for his Twitter post in which he claimed he had secured funding to take Tesla private at $420 a share—a statement that caused Tesla's stock price to jump. Musk ultimately settled that case by paying a $20 million civil fine, agreeing to have Tesla‘s lawyers vet certain tweets, and stepping down as Tesla’s chairman for three years.

FILE PHOTO: Elon Musk · Reuters

Musks legal battles with the SEC, including his ongoing dispute over his Twitter posts, have painted a complex picture of a billionaire who is unafraid to challenge regulatory authority. While his business empire—spanning electric vehicles, space exploration, and more—has earned him vast wealth and fame, it has also drawn him into frequent confrontations with regulators.

Other Lawsuits Related to Twitter Acquisition

In addition to the SEC‘s lawsuit, Musk faces other legal challenges related to his $44 billion acquisition of Twitter. Shareholders and investors have raised concerns about Musk’s handling of the deal, citing issues such as changes to Twitters management and operations following the acquisition, and allegations of stock manipulation. Musk has also been accused of failing to disclose key information to Twitter shareholders during the bidding process.

As the legal and financial fallout from Musk‘s Twitter purchase continues to unfold, his critics argue that his actions may have harmed both investors and the broader market. However, Musk’s defenders maintain that he acted within the law and that the SECs lawsuit is just another example of government overreach.

Conclusion

Musks legal battles are far from over, but as he faces multiple lawsuits over his Twitter purchase, the implications for both Twitter shareholders and broader market regulations will continue to evolve. For now, Musk remains defiant, and his complex relationship with the SEC shows no signs of ending anytime soon.

The SEC lawsuit marks the latest chapter in Elon Musk‘s long-running legal and regulatory troubles. As the case progresses, it will serve as a critical reminder of the importance of timely disclosures in the world of corporate acquisitions. Whether Musk’s legal strategy will succeed in defeating the SECs claims remains to be seen, but the case will undoubtedly attract continued attention from investors, regulators, and industry watchers alike.