US SEC sues Elon Musk over delayed disclosure of Twitter's ownership stake
Elon Musk Sued by SEC Over Twitter Stock Purchases
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, the CEO of Tesla, for allegedly failing to properly disclose his ownership of Twitter, now known as X. This failure reportedly allowed Musk to buy shares at artificially low prices. By mid-March 2022, Musk owned over 5% of Twitter's stock but did not disclose this to the SEC until April 4, 2022, despite being required to do so within 10 days.
The SEC claims that if Musk had disclosed his ownership on time, Twitter's stock price would have likely increased significantly. Musk's lawyer, Alex Spiro, stated that Musk did nothing wrong and criticized the SEC's actions as harassment. The lawsuit alleges that Musk underpaid Twitter investors by over $150 million during his stock purchases.
By March 24, 2022, Musk had increased his stake to over 7% and continued to buy shares, eventually owning over 9% by early 2022. This led to a 27% increase in Twitter's stock price. The SEC's lawsuit is one of the last actions under Chair Gary Gensler, who is stepping down. Musk has had ongoing disputes with the SEC, including a recent request to pay a fine related to his Twitter stock purchases.
Doubts Revealed
Elon Musk
Elon Musk is a famous businessman who leads companies like Tesla, which makes electric cars, and SpaceX, which builds rockets.
SEC
SEC stands for the Securities and Exchange Commission. It's a US government agency that makes sure people follow the rules when buying and selling company shares.
Twitter Stock
Twitter is a social media platform where people post short messages. Stock means owning a small part of a company, so Twitter stock means owning a part of Twitter.
Disclosing Stock Ownership
When someone buys a lot of shares in a company, they have to tell everyone about it. This is called disclosing stock ownership, and it helps keep the stock market fair.
Underpaying Investors
Underpaying investors means that because Elon Musk didn't tell everyone about his shares on time, he might have paid less money for them than he should have, which could be unfair to other people who own shares.
Gary Gensler
Gary Gensler is the person in charge of the SEC. He makes sure that the rules for buying and selling shares are followed.
Past Conflicts with SEC
Elon Musk has had disagreements with the SEC before, like when they fined him for not following the rules about buying and selling shares.
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