Musk seeks SEC lawsuit dismissal over 2022 Twitter stake disclosure
Elon Musk has asked for dismissal of a US Securities and Exchange Commission (SEC) lawsuit over his growing stake in Twitter (now X) in 2022, which claims that he “waited too long” to disclose his purchases of Twitter shares.
In January, the SEC filed a lawsuit against Musk in the US District Court for the District of Columbia for failing to disclose 5% Twitter stake acquisition within the ten-day deadline. The SEC says that the purchase allowed him to acquire over $500 million worth of shares at low prices, saving himself “at least $150 million at the expense of Twitter shareholders.”
Investors are required to disclose when they own more than 5% of a company. According to the SEC, Musk missed the deadline by 11 days — while disclosing his 9.2% Twitter stake on time would have sent the stock price soaring, meaning that investors who sold their shares too early missed out on big gains.
Following Musk’s public announcement of stock acquisition, the share price surged 27%.
“The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties,” the SEC said.
Yet the billionaire’s lawyers continue to insist that Musk’s delay was inadvertent.
“This action never should have been brought. The SEC’s allegations, even accepted as true, make clear that Mr. Musk allegedly late-filed a single beneficial ownership form by a matter of days in 2022. The SEC does not allege that Mr. Musk acted intentionally, deliberately, willfully, or even recklessly. The SEC does not allege that Mr. Musk caused any investor harm,” Musk’s lawyers said in a 60-page court filing late Thursday.
They added that, quite to the contrary, “Musk late-filed a single beneficial ownership form three years ago, and fully corrected any alleged error immediately upon its discovery,” claiming that there was no intent or harm.
As put by Musk’s attorneys, the action is therefore “a waste of this court’s time and taxpayer resources.”
They called the allegations that Musk “underpa[id] by at least $150 million” grossly disproportionate.
The SEC shot back on Friday, saying in a court filing that “this case involves a straightforward, strict liability violation of important public reporting requirements under the federal securities laws.”
The lawsuit became a part of a long feud between the billionaire and the SEC. In January, the regulator accused him of falsely hyping up his followers on social media to purchase infamous Dogecoin, artificially inflating its value.
In 2018, he was sued by the SEC for tweeting "funding secured" in reference to a possible plan to take Tesla private.
