Elon Musk Sued By SEC Over Twitters’ Shares
SEC’s Lawsuit:
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk with the allegations that him for violating security laws when he took over Twitter, now renamed X. According to the complaint that has been filed in federal court, Musk allegedly failed to reveal regarding his ownership of more than 5% of the Twitters’ shares on time and instead delayed the announcement to obtain more shares at a lower or discounted price.
Allegations:
According to the SEC, Musk should have filed a report announcing his 5% ownership by March 24, 2022, rather he did not choose to do so until April 4, 2022. During that time, he reportedly increased his stake from 5% to 9%, saving himself more than $150 million as Twitter’s stock increased 27% in price after the disclosure of this information. The SEC wants to impose civil penalties to return these apparent gains among other things. Musk’s lawyer, Alex Spiro, called it a weak attempt by the SEC to redeem itself, accusing the agency of a years-long harassment campaign. Musk has echoed those sentiments before when he rejected a settlement offer from the SEC. it will be up to a federal court to decide whether the SEC’s allegation is valid and whether to impose a penalty on Musk.
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Implications Of a New Shift:
Musk’s lawyer Alex Spiro labelled this complaint by the SEC as an “admission of the SEC’s inability to bring an actual case.” At this filing, Gensler, the SEC chairman, is preparing to leave the office, and the new commissioner nominated by Trump appears to take up the responsibility. This new leadership is suspected by analysts to be favourable for Musk and would shift things up. The court will decide upon the case and it will find whether Musk invaded the securities law and will look into any chance of what penalty would be appropriate to impose.
