- By Kamakshi Bishnoi
- Wed, 15 Jan 2025 11:46 AM (IST)
- Source:JND
Elon Musk has been sued by the US Securities and Exchange Commission (SEC) Tuesday, January14. SEC alleged that Musk failed to promptly disclose his investment of a significant stake in Twitter (now X) in 2022. Due to the disclosure, the Tesla owner was able to purchase an additional share worth USD 500 million at an artificially lower price.
According to the SEC's complaint, Musk surpassed the 5 per cent ownership threshold on March 14, 2022. As per SEC, investors are required to inform about the purchase within 10-working days if the investment reaches beyond 5 per cent ownership threshold.
The rule legally obligated him to disclose his stake by March 24, 2022 which he did not make public until April 4, 2022. During this time Musk increased his stakes to 9.2 per cent. SEC mentioned a rise of over 27 per cent, followed by the disclosure. Later, the Tesla CEO purchased twitter in October 2022 at USD 44 billion and renamed it as X.
The SEC is seeking a civil penalty and return their unjustifiably earned profits from these transactions. Lawyer of Musk, Alex Spiro, has dismissed the lawsuit as a "multi-year campaign of harassment," asserting that Musk did not engage in any law breaking.
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“Today’s action is an admission by the SEC that they cannot bring an actual case. Musk has done nothing wrong and everyone sees this sham for what it is," news agency Reuters quoted Alex Spiro, Lawyer of Elon Musk.
This legal action comes as SEC Chairman Gary Gensler prepares to step down, with President-elect Donald Trump expected to appoint Paul Atkins as the new chair.
Musk, a known supporter of Trump, has been selected to lead the Department of Government Efficiency (DOGE) in the incoming administration. These developments have led to speculation about the future trajectory of the SEC's lawsuit under new leadership.
In 2018, SEU sued Elon Musk for alleged security fraud. On August 7, 2018, the Tesla Ceo tweeted about taking Tesla private. The allegation resulted in a settlement requiring him to step down as Tesla's chairman and pay a USD 20 million civil fine.
