US market watchdog sues Elon Musk for disclosing his Twitter involvement

The US market watchdog has filed a lawsuit against Elon Musk, alleging he failed to disclose that he had acquired a stake in Twitter, allowing him to buy shares at “artificially low prices “.

The Securities and Exchange Commission (SEC) lawsuit alleges that the multi-billionaire Tesla boss saved $150 million (£123 million) in stock purchases as a result.

Under SEC rules, investors with holdings above 5% have 10 days to report that they have crossed that threshold. Musk did so 21 days after the purchase, the filing says.

In a social media postMusk called the SEC a “totally broken organization.”

He also accused the regulator of wasting its time while “so many real crimes go unpunished”.

“Musk’s violation resulted in substantial economic harm to investors,” the SEC complaint stated.

In an emailed statement to BBC News, Musk’s lawyer Alex Spiro called the lawsuit a “sham” and a “campaign of harassment” against his client.

Twitter’s stock price rose more than 27% after Musk made his stock purchase public on April 4, 2022, the SEC said.

Musk ended up buying Twitter for $44 billion in October 2022 and has since changed the platform’s name to X.

The complaint was filed by the SEC in a federal court in Washington, DC. Tuesday.

The lawsuit also asked the court to order Musk to forfeit “unfair” profits and pay a fine.

SEC Chairman Gary Gensler announced in November that he would resign from his position upon Donald Trump’s return to the White House on January 20.

This was after Trump said he planned to fire Mr. Gensler on “day one” of his new administration.

Under Mr. Gensler’s leadership, the SEC has clashed with Musk, who is a close ally of the president-elect.

But Musk had run-ins with the SEC long before Mr. Gensler took office.

In 2018, the regulator accused Musk of defrauding investors by claiming he had “obtained financing” to take Tesla, the electric car company he runs, private.

He later settled the charges, resigning as chairman of the company’s board and agreeing to accept what was dubbed a Twitter gatekeeper — limits on what he could write on social media about the company.