On Tuesday, the U.S. Securities and Exchange Commission initiated a lawsuit against Elon Musk, accusing him of failing to disclose his substantial stake in Twitter, now rebranded as X.
What Happened: The lawsuit outlines that before Musk completed his $44 million acquisition of Twitter in October 2022, he had already started amassing a significant number of shares.
By March 2022, Musk had acquired over 5% of Twitter’s common stock, a threshold that required disclosure to the SEC within 10 days.
This alleged non-disclosure allowed Musk to acquire shares at “artificially low prices,” according to the SEC.
The complaint, lodged in a federal court in Washington, D.C., accuses Musk and his wealth manager of withholding this crucial information to avoid a potential surge in Twitter’s stock price.
See Also: Elon Musk’s X, Hewlett Packard Strike $1 Billion AI Server Deal: Report
This alleged omission enabled Musk to underpay Twitter investors by more than $150 million for his stock purchases during this period.
According to the lawsuit, Musk increased his stake to 7% by purchasing nearly 3.5 million shares on March 25, 2022.
He later joined Twitter’s board and formally disclosed his stake in early April 2022, by which time he owned over 9% of the company, causing Twitter’s stock price to rise by more than 27%.
Why It Matters: Last month, Musk faced a deadline to settle with the SEC over his Twitter buyout, with his lawyer alleging “years of harassment” by the agency. The inquiry focused on Musk’s sale of Tesla Inc. TSLA shares and his growing investment in Twitter before announcing a leveraged buyout of the social media platform in 2022.
In October 2024, the SEC rejected Musk’s offer to pay $2,923 for missing a deposition related to his 2022 Twitter purchase, seeking sanctions against him instead.
Musk and Vivek Ramaswamy, co-leading the “Department of Government Efficiency” in Donald Trump's administration, have previously criticized the SEC, labeling it as a “weaponized institution.” Their statement came following the Fifth Circuit Court decision that the SEC exceeded its authority by approving Nasdaq’s diversity quota policy.
Read Next:
Image via Shutterstock
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
