Elon Musk, the billionaire founder of Tesla and SpaceX, has once again come under fire from Securities and Exchange Commission (Sec), the US authority that supervises financial markets. The body has sued for financial fraud in relation toacquisition of Twitter, today known as X, occurred in 2022 for the record figure of 44 billion dollars. The charges against Musk concern an alleged violation of financial regulations: according to the SEC, he would have delayed by 11 days in notifying the exceeding of the threshold of 5% of Twitter shares. This delay would have allowed him to buy shares at a lower price, saving at least $150 million.
What was supposed to be a strategic move quickly turned into one of the most controversial financial transactions in recent years. Twitter's transformation into X not only caused billions in losses for the company, but also sparked a wave of criticism for Musk's drastic decisions. Among these, the most notable ones were the firing of a large part of the staff and the significant changes made to the social network's functionality.
Musk in Trouble Over Twitter Acquisition: What the SEC Says
The SEC claims that Musk has violated transparency rules, harming the market and investors: “By failing to promptly disclose his stock interest, he was able to purchase shares at artificially low prices, causing significant economic harm to unsuspecting investors,” the SEC said in the lawsuit filed in federal court in Washington.
The delay in communication would also have Twitter stock price inflated of 27% after the official notification on April 4, 2022, when Musk had already accumulated 9,2% of the share capital.
This is not the first clash between Musk and the SEC. In 2018, the Brazilian billionaire was accused of manipulating the market with a tweet in which he declared that he had the “secured funding” to privatize Tesla. At that time, Musk agreed to pay a $20 million fine and stepped down as chairman of the company.
Musk's defense
The wait was not long in coming legal team's response of the tycoon. Alex SpiroMusk's lawyer, called the lawsuit a “travesty” and a demonstration of the SEC's inability to build a solid case: “Musk has done nothing wrong, and this is just the latest chapter in a campaign of intimidation against him.”
Spiro also revealed that, about a month ago, the US authority had offered a out of court settlement, offering Musk to pay more than $200 million to resolve the Twitter-related allegations, with a 48-hour ultimatum to accept. Spiro called the request “improper and punitive,” noting that in similar cases, fines typically don’t exceed $100. Musk’s refusal was followed by a lawsuit.
What to expect?
As if that weren’t enough, the case is intertwined with politics: Musk was a close adviser to former President Donald Trump.
The lawsuit against Musk could be one of the most sensational last acts of Gary Gensler's presidency at the helm of the SEC. But, as always, the billionaire seems ready to fight, promising a legal battle that will cause controversy.