The U.S. Securities and Exchange Commission Sues Elon Musk for Failure to Disclose Twitter Ownership
The U.S. Securities and Exchange Commission (SEC) has sued billionaire Elon Musk, alleging that he failed to disclose his ownership of Twitter stock in a timely manner in early 2022, before buying the social media site.
As a result, the SEC alleges that Musk was able to underpay "by at least $150 million" for shares he bought after he should have disclosed his ownership of more than 5 per cent of Twitter’s shares. Musk bought Twitter in October 2022 and later renamed it X.
Musk started amassing Twitter shares in early 2022, and by March of that year, he owned more than 5 per cent. At this point, the complaint says, he was required by law to disclose his ownership, but he failed to do so until April 4, 11 days after the report was due.
Musk’s lawyer, Alex Spiro, said in a statement that the lawsuit "is an admission by the SEC that they cannot bring an actual case" since Musk has "done nothing wrong."
Background
Before it filed the lawsuit, the SEC went to court in an attempt to compel Musk to testify as part of an investigation into his purchase of Twitter.
The SEC’s current chair, Gary Gensler, plans to step down from his post on Jan. 20 and it is not clear if the new administration will continue the lawsuit.
Recent Developments
Musk tried to back out of his deal to acquire Twitter in April 2022, leading the company to sue him to force him to go through with the acquisition.
Investigation
The SEC authorized an investigation into whether any securities laws were broken in connection with Musk’s purchases of Twitter stock and his statements and SEC filings related to the company, starting in April 2022.
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Conclusion
The lawsuit raises questions about Musk’s compliance with securities laws and the SEC’s ability to regulate corporate behavior.
FAQs
- Why did the SEC sue Elon Musk?
- The SEC alleged that Musk failed to disclose his ownership of Twitter stock in a timely manner.
- What was the outcome of the investigation?
- The investigation found that Musk underpaid for shares he bought after failing to disclose his ownership of more than 5 per cent of Twitter’s shares.
- What is the impact of the lawsuit on Musk and Twitter?
- The lawsuit could have significant consequences for Musk and Twitter, including fines and penalties.
- The outcome of the lawsuit may also impact the future of the company and Musk’s role as CEO.
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