Elon Musk is being sued by the SEC for late disclosure of stock purchases on Twitter

The US Securities and Exchange Commission (SEC) has sued Elon Musk, saying the billionaire failed to disclose his acquisition of Twitter shares within the legally required period of 2022. The most surprising aspect of this case is that it took so long to arrive.

Filed in District of Columbia Court on Tuesday, the lawsuit concerns Musk’s actions leading to his $44 billion purchase of the microblogging platform Twitter three years ago (which he has since renamed X). By March 14, 2022, Musk had purchased enough shares of Twitter to make him more than 5 percent of the publicly traded company. Thus, under Securities Exchange Act of 1934, Musk was legally obligated to file a report notifying the SEC of his discovery within 10 days.

However, instead of disclosing his purchase on March 24, Musk is said to have waited 11 days before the deadline before notifying the SEC on April 4. He reportedly spent more than $500 million to buy more Twitter shares. meanwhile, increasing his stake to 9.2 percent.

When Musk announced his purchase, Twitter’s stock price rose, pushing Musk’s stock value to $2.89 billion. Twitter stocks ended the day 27 percent higher than the previous day’s closing price, driven by news of a billion dollar investment.

Thus, Musk’s delay in disclosure enabled him to buy more shares at a lower price than they would have sold if he had fulfilled his reporting obligations. According to the lawsuit, this saved him at least $ 150 million. Musk’s delay also prevented other investors who sold their shares from realizing the increased value, which the SEC says “suffered the economy.”

The SEC is seeking fines, and that Musk be forced to disgorge any profits he made from his alleged violations.

Reports that the SEC was investigating Musk’s purchase of Twitter stock first surfaced in 2022, less than a month after the deal was struck. Now it seems that the security regulator is ready to act, but whether Musk will take the case seriously is another matter. The building has made no secret of its contempt for the SEC.

It is not the only case that Musk is facing because of his delay in reporting. A class action lawsuit was also filed against Musk in 2022 by former Twitter shareholders who sold their shares during the gap between the purchase and the disclosure of the billion. The case is still ongoing.