Elon Musk's Twitter Stake: SEC Alleges Artificially Low Stock Prices

Elon Musk, the billionaire CEO of Tesla and SpaceX, is facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) for allegedly hiding his stake in Twitter, allowing him to buy stock at artificially low prices. The SEC alleges that Musk violated federal securities laws by failing to timely disclose his beneficial ownership of more than 5% of Twitter's stock, which he acquired in early 2022.



According to the SEC's lawsuit, Musk was required to disclose his stake within 10 days of acquiring it, but he waited 11 days before doing so. This delay allowed him to continue purchasing shares at artificially low prices, underpaying by at least $150 million, and harming investors who sold their shares at low prices during this period. The SEC is seeking to recover the money Musk made as a result of the late disclosure, as well as a civil penalty and other punishments.

Musk's lawyer, Alex Spiro, has criticized the SEC's lawsuit as a "sham" and accused the agency of harassing and targeting Musk. However, the SEC's allegations highlight the potential impact of Musk's delayed disclosure on Twitter's stock price and its investors.

The SEC's lawsuit is just the latest in a series of legal battles between Musk and the agency. In 2018, Musk and Tesla paid a combined $40 million settlement related to a tweet Musk sent about taking Tesla private for $420 a share, despite no plans being in the works. Musk has repeatedly criticized the SEC's tactics and has unsuccessfully tried to appeal the settlement.

As the SEC's lawsuit against Musk unfolds, it remains to be seen how the case will impact his future business ventures and his relationship with the agency. The penalties and remedies sought by the SEC, including disgorgement of unjust enrichment, a civil penalty, and an injunction, could have significant financial and operational implications for Musk and his companies.

In conclusion, the SEC's lawsuit against Elon Musk for allegedly hiding his Twitter stake and buying stock at artificially low prices highlights the importance of timely and accurate disclosure in the securities market. As the case progresses, it will be interesting to see how the court rules on the SEC's allegations and what penalties or remedies are ultimately imposed on Musk.