The American financial watchdog has filed a lawsuit against Elon Musk. It claims that the billionaire failed in his duty to disclose the acquisition of Twitter shares and was able to purchase the social network at a price $150 million lower than it would have otherwise been.
According to the SEC, its rules require that parties who acquire five percent of or more of an entity listed to report this fact within ten business days. The rule was designed to inform investors about large purchases that could signal upcoming market-moving event, such as an upcoming takeover bid.
According to the regulator’s lawsuit, Musk’s Twitter holdings crossed the five percent threshold in March 2022. However, he didn’t disclose this fact until April 4, eleven days after the March 24 deadline.
Following Musk’s disclosure on April 4, the value of Twitter stock increased by 27 percent. The complaint also claims that between March 24 to April 4, Musk purchased another $500 million worth of Twitter stock. Investors who sold Twitter stock during this time period did so for artificially low prices.
According to the SEC, if Musk had revealed his holdings on March 24, Twitter shares would have likely increased in value – making purchases between that date and 4 April more expensive. The complaint states that Musk underpaid Twitter shareholders by more than 150 million dollars for his purchases of Twitter stock during this time period. Investors who sold Twitter stock during this time period sold it at artificially low price and suffered substantial economic damage.
This lawsuit supports the argument that Musk, his wealth manager and a broker hired to acquire shares on behalf of the billionaire knew that Twitter’s share price would increase.
According to the complaint, Musk allegedly informed a Twitter Board of Directors member privately on March 27, 2022 that he owned at minimum seven percent of Twitter common stock. Musk asked the director if he had ever considered taking Twitter private. The director replied: “Yes.”
Musk purchased more Twitter shares the next day.
- April 2022 Elon Musk’s newest launch: An uninvited Twitter takeover.
- July 2022 Twitter sues Musk, saying he can’t simply ‘change his opinion, trash the company and walk away.’
- October 2022 Elon Musk jettisons Twitter’s leadership, claiming that takeover was to ‘try to help humanity.’
- July 2024 Twitter has grown by an incredible 1.6% Amazing. Wow
In the complaint, Musk describes other interactions with Twitter directors in which he was invited by the Twitter directors to join their board and Musk expressed his desire to purchase the social network outright. Musk is alleged to have bought more Twitter shares after those interactions and before his April 4, 2014 disclosure.
Musk is alleged to have bought Twitter stock before his April 4 disclosure. The complaint says that Musk must pay a penalty for missing deadlines and “pay disgorgement of unjust enrichment.”
We all know that the world’s wealthiest man, Elon Musk, bought Twitter – now known as X – in late April 2022, for $44 billion, with helpof investor friends.
Musk’s lawyer Alex Spiro issued a statement in which he wrote: “Today’s action is an admission by the SEC that they cannot bring an actual case, because Mr Musk has done nothing wrong and everyone sees this sham for what it is,” and once again accused the regulator of running a “multiyear campaign of harassment.”
Spiro described the case as “a single-count ticky-tack complaint.”
Meanwhile, somewhere in the far reaches of the Indian Ocean
The lawsuit is not Musk’s only new item for consideration: Australian airline Qantas has asked his other biz SpaceX to provide it with more timely information about when its rockets re-enter Earth’s atmosphere over the Indian Ocean. Qantas, which flies from Sydney to Johannesburg, has had to delay flights after US authorities delayed updates about the arrival of SpaceX’s rockets.
The airline’s performance has been criticized in recent years, and the one to six-hour delays that it’s been forced to make are not welcomed by passengers.
A Qantas spokesperson said to The Register that they were in contact with SpaceX, to see if the company could refine the areas and the time windows for rocket re-entry to minimise disruption to passengers. (r)
