The SEC accuses Elon Musk of failing to report his Twitter findings on time

The Securities and Exchange Commission sued Elon Musk on Tuesday for alleged securities violations related to his acquisition of Twitter, now known as X.

The SEC says Musk failed to disclose his 5% ownership of Twitter in a timely manner, in violation of federal securities laws, according to the complaint filed in federal court in Washington, DC. The SEC says Musk waited to disclose his earnings to create a larger position in Twitter at a lower price.

This case comes in the last week of Gary Gensler as chairman of the SEC, before he leaves on January 20. Gensler and Musk have had a few conflicts over the past four years, including last month when. Musk dismissed the offer from the SEC office on X. However, Musk may face a friendly SEC commissioner in the weeks after Trump’s nominee takes office.

The SEC complaint alleges that Musk disclosed that he acquired Twitter 11 days late. After buying more than 5% of Twitter – which Musk said he did on March 24, 2022 – he was asked by the SEC to provide a beneficial ownership report. He filed the report on April 4, 2022, according to the SEC complaint.

During this delay, Musk reportedly increased his stake in Twitter from a 5% stake to a 9% stake. The day Musk disclosed the acquisition to the SEC, Twitter’s stock price rose 27% from the previous day’s closing price. The SEC claims that this allowed Musk to pay less for his Twitter account with more than $150 million.

In its complaint, the SEC is demanding that Musk return the profits he unfairly reaped, as well as pay a civil penalty. Ultimately, a federal court will decide whether the SEC’s claims have merit, and determine whether Musk should be fined.

Musk’s lawyer, Alex Spiro, called the complaint an “acknowledgement” that the SEC would not bring a “real case,” in his words. Bloomberg the second.

“As the SEC backs away and leaves, the SEC’s years-long effort to harass Mr. Musk culminated in filing Mr. Musk’s ticky tak complaint,” Spiro told Bloomberg.

In December on X, Musk shared a letter from Spiro hitting similar documents, also referring to “years of abuse” from the SEC. The letter rejected a ruling from the SEC in the case.

To fill Gensler’s position, President-elect Donald Trump chose Paul Atkinswho served as SEC Commissioner during the Bush administration and is expected to be friendly to Trump allies. These days, Musk is as close to Trump as anyone, and the owner of X could face a different regime in just a few weeks.