The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk. The lawsuit centers on Musk’s purchase of Twitter stock early this year. The SEC says Musk failed to disclose his ownership above 5% of Twitter stock in time. However, under federal law, this must be reported within 10 days. However, Musk allegedly failed to meet this deadline and reported his ownership 11 days later.
The SEC lawsuit against Elon Musk highlights the growing regulatory scrutiny on financial disclosures, which could extend to the crypto market. As Musk is a prominent influencer in both tech and crypto, any legal outcomes might affect investor sentiment and raise concerns about compliance in crypto-related activities. The case can bring volatility in the crypto market as well.
It is important to note here that Elon Musk is very close to Donald Trump. Gary Gensler is already leaving SEC and this move just 5 days before Trump’s inauguration raises few question marks.
SEC Accuses Musk of Underpaying $150 Million for Twitter Shares
Therefore, the SEC says, Musk proceeded to purchase more shares at a lower price. The agency says the delay caused him to underpay by at least $150 million. The case is moving to jury trial, where the question will be resolved, the SEC indicated. Alex Spiro, Musk’s lawyer, denied wrongdoing. He said that the lawsuit was ‘a sham’ and ‘not based in any solid grounds.
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The purchases of Twitter shares began by Musk in March 2022. By April 2022, he began purchasing more stock and he now controls the company. In October 2022, he actually bought Twitter for $44 billion. The SEC lawsuit follows a series of chargers against Musk. It also included another suit the SEC filed against him in 2018 over a tweet about Tesla.
Musk Lawyer Spiro Calls the Lawsuit Against Musk ‘Administrative Failure,’ Defends Client
Spiro made a defense by calling this latest SEC move an ‘administrative failure,’ and also maintained that it was not a serious issue. He said the SEC’s actions are part of a wider effort to gun for Musk. It is the second time Musk has faced off against the SEC in court. Actually, it is the third lawsuit that the agency has leveled against him. Musk, however, still denies wrongdoing and says his actions are not unfounded.
In the end, SEC is now looking at the fact that Musk did not report his purchases punctually. It has resulted in a legal battle between Musk, who says he did nothing wrong. In the meantime, the lawsuit will continue to unfold, and its outcome remains uncertain.