US SEC sues Musk for failing to disclose purchase of Twitter stock as required by regulations, missing out on $150 million
US SEC sues Musk for failing to disclose purchase of Twitter stock as required by regulations, missing out on $150 million
The U.S. Securities and Exchange Commission (SEC) on Tuesday sued Tesla Inc (TSLA.O) Chief Executive Officer Elon Musk for failing to disclose his 9% stake in Twitter Inc (TWTR.N) within 11 days of crossing a 5% threshold, an omission that allowed him to continue buying shares at lower prices and avoid paying $150 million more.
The SEC filed a lawsuit in federal court in Washington, D.C., accusing Musk of alleged securities violations. The SEC said Musk violated federal securities laws by purchasing more than 9% of Twitter common stock in March 2022, but failed to disclose relevant information in a timely manner. After an 11-day delay, Musk publicly disclosed his beneficial ownership in a report submitted to the SEC on April 4, 2022.
The delay allowed Musk to continue buying Twitter shares at artificially low prices, saving at least $150 million. On April 4, 2022, Twitter's stock price rose by more than 27% from the previous day's closing price. Musk's lawyer responded that Musk did nothing wrong and the lawsuit was "a farce."
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