Tech billionaire Elon Musk (54) has failed in its attempt to get rid of a lawsuit from the US Securities and Exchange Commission in connection with its share purchases in the acquisition of X (formerly Twitter) in 2022. Musk’s lawyers had argued that the SEC had applied laws selectively and that the lawsuit attacked his right to free speech. However, the judge responsible saw no reason to dismiss the lawsuit.
The SEC accuses Musk of not disclosing in a timely manner that his shareholding exceeded the 5 percent mark when purchasing Twitter shares. This meant he was able to buy more shares cheaper. After the takeover, he converted Twitter into his online platform X.
SEC: $150 million saved by violating rules
The authority analyzed Musk’s purchases and came to the conclusion that he got off more than 150 million dollars (around 127 million euros in today’s money) cheaper as a result of the late mandatory notification. However, the shareholders who sold their shares to him during this time would have suffered financial damage. The SEC is demanding that Musk repay the sum – plus an additional penalty.
The tech billionaire began buying Twitter shares on the market at the beginning of 2022. The SEC points out in the complaint that its stake reached 5 percent on March 14, 2022. According to US rules, he would have had to make this public within ten calendar days. However, Musk only announced on April 4th – eleven days late – that he already held 9 percent. The stock price then jumped 27 percent, the SEC highlighted.
Musk spent a total of around $44 billion on the purchase of Twitter, which was completed in October 2022. For the majority of the sum, he sold his shares in the electric car manufacturer he runs Tesla. Musk also took out loans of around $12 billion.