SEC sues Elon Musk for allegedly screwing investors out of $150M before Twitter takeover
America's financial watchdog has sued Elon Musk, alleging the billionaire failed to disclose his acquisition of Twitter shares in a timely manner and was therefore able to acquire the social network for $150 million less than would otherwise have been the case.
The SEC's beef is that its rules require parties that acquire five percent or more of a listed entity to report that fact within ten days of doing so. The rule is designed to ensure investors are informed about big buys that could indicate upcoming market-moving events, such as a takeover bid.
The regulator's lawsuit claims Musk’s holdings in Twitter crossed the five percent threshold on March 14, 2022, but that he did not disclose the fact until April 4 – eleven days beyond the March 24 disclosure deadline.
The SEC argues that if Musk had disclosed his holding on March 24, Twitter’s share price would likely have increased – making the purchases made between that date and April 4 more expensive.
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