In a complaint filed in Washington federal court, the SEC said Musk violated federal securities law by waiting 11 days too long to disclose his initial purchase of 5 per cent of Twitter’s common shares.
An SEC rule requires investors to disclose within 10 calendar days, or by March 24, 2022 in Musk’s case, when they cross a 5 per cent ownership threshold.
The SEC said that at the expense of unsuspecting investors, Musk instead bought more than US$500 million of Twitter shares at artificially low prices before finally revealing his purchases on April 4, 2022, by which time he owned a 9.2 per cent stake.
Twitter’s share price rose more than 27 per cent following that disclosure, the SEC said.
Tuesday’s lawsuit seeks to force Musk to pay a civil fine and disgorge profits he did not deserve.
