When it came to the Twitter takeover, Elon Musk reported too late that he had exceeded an important stake limit. This meant he was able to continue to buy shares in the company cheaply – to the detriment of the sellers. The US Securities and Exchange Commission (SEC) has sued tech billionaire Elon Musk in connection with his share purchases when taking over Twitter in 2022. It is alleged that Musk was able to purchase more shares at a lower cost because he failed to promptly notify that his holding had beyond the five percent threshold. The SEC conducted an extensive investigation into the issue.
Financial damage to shareholders
The tech tycoon started purchasing Twitter stock at the beginning of 2022. According to the SEC’s lawsuit, on March 14, 2022, his ownership increased to 5%. He was required by US law to make this public within 10 calendar days. Eleven days later, on April 4, Musk finally declared that He had already acquired 9 %. The share price then jumped by 27 percent, as the SEC pointed out.
The agency analyzed Musk’s purchases and concluded that he had gotten off more than $150 million cheaper by delaying the mandatory disclosure. The shareholders who sold him their shares during this time, however, suffered financial losses. The SEC is demanding that Musk pay back the sum – plus an additional penalty.
SEC gets new leadership under Trump
Musk’s lawyer, Alex Spiro, responded that the tech businessman had “done nothing wrong.” In a statement to Bloomberg, he also mentioned the SEC’s “campaign” against Musk, which had been ongoing for years.
It is unclear how the lawsuit will proceed. Musk is a close companion of Donald Trump, who will be officially appointed as the next president of the United States on January 20th. Additionally, the SEC will have new leadership as a result of the White House transition. The current head, Gary Gensler, has already announced his resignation for the day. It is therefore conceivable that the lawsuit will be dropped quickly.
Musk spent a total of around $44 billion on the purchase of Twitter, which was completed in October 2022.He used the vast majority of the sum to sell his stock in Tesla, the company he owns and operates that makes Electric car. Musk also took out loans of around $12 billion. After the takeover, he converted the service into his online platform X. https://youtu.be/dhAsA9weqes?si=920rbwRhH6zxq4Nd