'Lawfare Needs to Stop': Elon Musk Responds to SEC Lawsuit Accusing Him of Underpaying for Twitter, Now X The SEC alleged that Musk committed securities fraud in 2022 when buying Twitter.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- The Securities and Exchange Commission filed a lawsuit against Elon Musk on Tuesday.
- Musk delayed filing an ownership report by 11 days, resulting in him allegedly underpaying for Twitter shares by at least $150 million, the SEC complaint states.
- Musk criticized the agency in posts on X on Tuesday and Wednesday.
The Securities and Exchange Commission (SEC) is accusing Elon Musk of underpaying for Twitter by at least $150 million when he purchased it for $44 billion in 2022 and later rebranded it to X in 2023. Now Musk is taking to the very same platform under scrutiny, X, to push back against the SEC's allegations.
In a complaint filed against Musk on Tuesday in the U.S. District Court for the District of Columbia, the SEC alleges that Musk achieved a large Twitter stock position without filling out the proper paperwork in time.
Musk amassed a stake in Twitter of greater than 5% of outstanding shares by March 14, 2022, but allegedly failed to report his ownership status to the SEC within 10 calendar days, or by March 24, 2022.
Related: Carl Icahn Settles SEC Stock Pledge Charges for $2 Million
According to the complaint, he waited eleven days after the deadline to file the report.
Elon Musk. Photo by Allison Robbert-Pool/Getty Images
When Musk was allegedly delaying filing the paperwork, he bought $500 million worth of Twitter stock. The SEC accused Musk of buying stock "at artificially low prices from the unsuspecting public" by understanding that if the public knew about his stake, Twitter's stock price might go up and he could be required to pay more for the same number of shares.
Musk filed the SEC form on April 4, 2022, and Twitter's stock price jumped by more than 27%. By not filing a report with the SEC by the date he was required to, the SEC estimated that Musk underpaid when buying Twitter by at least $150 million.
"Had Musk publicly disclosed his Twitter holdings by filing a beneficial ownership report with the SEC by March 24, 2022, as required, Twitter's stock price would likely have increased substantially at that point, instead of on April 4, 2022," the SEC's complaint reads.
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The SEC asked for Musk to pay a civil penalty as well as "disgorgement of his unjust enrichment."
Elon Musk Responds to the SEC
In a post on X on Tuesday, Musk criticized the SEC, calling it a "totally broken organization."
"They spend their time on s--- like this when there are so many actual crimes that go unpunished," he wrote.
Musk also wrote on Wednesday that "lawfare needs to stop," and accused Democrats of taking legal action against citizens instead of "fighting real crime."
Lawfare needs to stop.
— Elon Musk (@elonmusk) January 15, 2025
Instead of fighting real crime, under the Democrats, citizens are prosecuted, while serious criminals run free.
In fact many of the criminals are in the government. At least for another 5 days. https://t.co/XpDgXNt8zI
The SEC will soon have new leadership. Its current chair, Gary Gensler, will step down when President-elect Donald Trump takes office on Monday, per the New York Times. It's unclear whether the commission's new leadership will pursue legal action against Musk.
Musk will have a role in Trump's government. In November, Trump appointed Musk and Vivek Ramaswamy as the co-leads of a new Department of Government Efficiency aimed at downsizing the U.S. government.
Musk is worth $427 billion at the time of writing, according to the Bloomberg Billionaires Index.
