Elon Musk Faces Legal Battle Over Allegedly Manipulating Twitter Share Prices

Introduction

Elon Musk, the billionaire entrepreneur, is facing a lawsuit from the US Securities and Exchange Commission (SEC) for allegedly failing to disclose his acquisition of over 5% of Twitter shares within the required timeframe. The SEC claims this delay allowed Musk to purchase additional shares at artificially low prices, resulting in significant financial gains.

Allegations of Non-Disclosure

According to the SEC, Musk began purchasing Twitter shares in March 2022 and crossed the 5% ownership threshold that triggers mandatory disclosure. However, the lawsuit alleges that Musk delayed announcing his stake until 4 April 2022—11 days past the legal deadline. By that time, Musk had acquired over 9% of the company's shares.

The SEC contends that this delay allowed Musk to save at least $150 million (£123 million) by purchasing shares at lower prices. Following his public disclosure, Twitter's share price surged by more than 27%, significantly increasing the value of his holdings.

SEC's Legal Demands

The SEC has filed its complaint in a federal court in Washington, D.C., seeking penalties against Musk. These include a civil fine and the forfeiture of any profits he allegedly gained from the delayed disclosure.

An SEC rule mandates that investors must disclose their holdings within 10 calendar days of crossing the 5% ownership threshold to ensure market transparency. The commission accuses Musk of breaching this rule and unfairly profiting at the expense of other investors.

Musk's Response

Musk's legal team has dismissed the SEC's allegations, labelling the lawsuit as baseless. In a statement, Musk’s lawyer said: "Mr Musk has done nothing wrong, and everyone sees this sham for what it is." Musk, known for his confrontational stance against regulatory bodies, has yet to comment publicly on the case.

The Twitter Acquisition and Its Aftermath

Musk eventually purchased Twitter in October 2022 for $44 billion (£36 billion), rebranding the social media platform as X. His acquisition has been marked by significant changes to the platform's operations and policies, attracting both praise and criticism.

A New Role Under the Trump Administration

In an unrelated development, Musk has been appointed to lead the newly created Department of Government Efficiency (DOGE) under the incoming Trump administration. This department, co-headed by former Republican presidential candidate Vivek Ramaswamy, aims to reduce government bureaucracy, streamline regulations, and cut wasteful expenditures.

Conclusion

The SEC’s lawsuit against Elon Musk over his alleged failure to disclose his Twitter share purchases in a timely manner could have significant financial and legal implications. While Musk’s legal team denies any wrongdoing, the case highlights the importance of regulatory compliance in maintaining market transparency. As the situation unfolds, it will undoubtedly attract global attention, given Musk’s high-profile status and influence.

Source: (Sky news.com)