NIXSolutions: Musk Wrongly Purchased Twitter and Will Now Answer for It in Court

According to existing US laws, Elon Musk, who began buying up Twitter shares in March 2022, should have declared the concentration of 5% of the company’s shares in his hands on March 24 of the same year. However, he did so 11 days later, which led to a lawsuit filed by the US Securities and Exchange Commission (SEC). Now Musk faces a fine and allegations of unfair profits, since the delay in disclosing his holdings may have provided him with an undue advantage.

NIXSolutions

The corresponding lawsuit was filed by SEC representatives in the Federal Court for the District of Washington this week, as reported by Reuters. According to the prosecution, in the spring of 2022, the delay in disclosing information about his purchase of Twitter shares allowed him to acquire these securities for more than $500 million at artificially low prices, allegedly to the detriment of “unsuspecting shareholders.” Musk disclosed the information only on April 4, 2022, when he already owned 9.2% of the shares, although he should have done so after reaching the 5% threshold. Twitter shares jumped 27% immediately after the disclosure, which attracted even more attention to the timing of Musk’s actions.

Legal Ramifications and Ongoing Tensions

Musk’s lawyer, Alex Spiro, said the SEC’s lawsuit is the “culmination of a multi-year campaign of harassment” of his client. He maintains that the offense is an administrative one, deserving only a simple fine if Musk is found guilty. The timing of the lawsuit is not accidental, since following the inauguration of Donald Trump as US President, the leadership of the US Securities and Exchange Commission itself is set to change next week. Current SEC Chairman Gary Gensler will have to give way to Paul Atkins, who is rumored to be planning to significantly revise the policies of his predecessor in this post.

For similar reasons, Musk is also being sued by former Twitter shareholders, who predictably missed out on benefits as a result of his delayed disclosure. Musk’s representatives stated at the hearing that the delay was the result of an error, not malice. The SEC has had other complaints against Musk, too, so the billionaire’s relationship with the agency can be described as “strained,” to say the least.

In the meantime, the lawsuit continues to draw significant attention from legal experts, financial analysts, and the public, notes NIXSolutions. As developments unfold, we’ll keep you updated on any new information regarding Musk’s legal challenges and the SEC’s stance on this case. Observers remain attentive to potential shifts in regulatory policies, as well as to any impacts on Twitter’s share prices and on the broader technology sector.