SEC Alleges Elon Musk's Twitter Disclosure Lapse: A $150M Misstep

Elon Musk, the enigmatic CEO of Tesla and SpaceX, has found himself in hot water once again with the U.S. Securities and Exchange Commission (SEC). The SEC has filed a lawsuit against Musk, alleging that he failed to properly disclose his ownership in Twitter, now known as X, in a timely manner. This delay, according to the SEC, allowed Musk to underpay for shares by at least $150 million.

Musk's Twitter acquisition saga began in 2022 when he bought the social media platform for approximately $44 billion. However, the SEC alleges that Musk's stake in Twitter reached the 5% threshold that requires public disclosure as early as March 14, 2022. Musk, however, did not make the required disclosure until April 4, 2022, nearly two weeks later. This delay, the SEC argues, allowed Musk to continue buying shares at artificially low prices, to the detriment of other investors.

The SEC complaint, filed in Washington, D.C., federal court, alleges that Musk's delay in disclosing his stake in Twitter allowed him to underpay for shares by at least $150 million. The complaint also alleges that Musk's actions violated Regulation Fair Disclosure (Reg FD), which requires public companies to disclose material information to all investors at the same time.

Musk's delayed disclosure had a significant impact on Twitter's stock price. The stock soared 27% from its April 1 close to nearly $50 by the end of April 4's trading, depriving investors who sold shares before Musk's disclosure the chance to realize significant gains. Meanwhile, Musk was able to continue buying shares at prices ranging from $37.69 to $40.96.