US markets watchdog sues Musk over Twitter stake disclosure

The Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, accusing him of failing to disclose his stake in Twitter (now known as X), thereby allowing him to purchase shares "at artificially depressed prices." The lawsuit claims that the Tesla billionaire boss saved $150 million (approximately £123 million) on stock purchases as a result.

According to SEC regulations, investors whose shareholdings exceed 5% must report that they have crossed the threshold within 10 days. The lawsuit documents indicate that Musk reported it 21 days after the purchase. Musk himself has called the SEC a "completely broken agency."

Musk also accused the regulator of wasting time, because "so many actual crimes go unpunished." The SEC's lawsuit states that "Musk's violations caused significant financial harm to investors." Musk's lawyer, Alex Spiro, stated in an email statement sent to BBC News that the lawsuit was a "farce" and a "harassment campaign" against his client.

The SEC stated that after Musk publicly disclosed his stock purchases on April 4, 2022, Twitter's share price rose by more than 27%. Musk ultimately acquired Twitter for $44 billion in October 2022, and subsequently renamed the platform X. The lawsuit was filed by the SEC in the federal court in Washington, D.C. on Tuesday.

The lawsuit also seeks a court order requiring Musk to relinquish "unjust" profits and pay penalties. SEC Chairman Gary Gensler announced in November that he would resign when Donald Trump returns to the White House on January 20th. This comes after Trump stated his plan to fire Gensler on "day one" of his new administration. Under Gensler's leadership, the SEC has clashed with Musk, a close ally of the president-elect.

However, Musk had clashed with the SEC even before Gensler took office. In 2018, the regulator accused Musk of deceiving investors by falsely claiming he had "funding secured" to take his electric vehicle company, Tesla, private. He later settled those charges, stepped down as chairman of the company's board, and agreed to accept a so-called "Twitter sitter" - restricting his comments about the company on social media.