SEC Sues Musk, Alleging Late Twitter Ownership Disclosure Let Him Underpay by at Least $150 Million
On January 14, 2025, the U.S. Securities and Exchange Commission (SEC) filed suit in Washington, D.C., in the U.S. District Court for the District of Columbia, charging Elon Musk with failing to timely file a beneficial ownership report, as required by the federal securities laws, after he acquired shares of Twitter, Inc. (now X) in 2022. The case is No. 1:25-cv-00105.
According to the SEC's complaint, Musk had acquired beneficial ownership of more than five percent of Twitter's outstanding common stock by March 14, 2022, which required him to file a report within 10 calendar days, by March 24, 2022. He did not file until the morning of April 4, 2022, when his Schedule 13G disclosed that his stake had grown to more than nine percent; Twitter's stock price jumped by more than 27 percent after the disclosure.
The complaint alleges that between March 25 and April 1, 2022, while the report was overdue, Musk purchased more than $500 million worth of additional Twitter stock. Because the material information of his ownership and investment purpose had not yet been priced in, he was able to buy at artificially low prices from the unsuspecting public, underpaying by at least $150 million, while investors who sold during that period suffered substantial economic harm.
The SEC charges Musk with violating Section 13(d) of the Securities Exchange Act of 1934 and Rule 13d-1 thereunder, a provision that imposes a strict liability standard. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.
Musk's attorney Alex Spiro responded the same day by calling the lawsuit a "sham" and the culmination of a years-long campaign of harassment by the agency. The case was among the final enforcement actions filed under SEC Chair Gary Gensler, a week before the January 20 change of administration.
(Source: U.S. Securities and Exchange Commission)
Source: U.S. Securities and Exchange Commission
Published by GSM · USA (original Chinese edition)
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