US SEC Sues Musk for "Violation of Twitter Stake Disclosure Obligations"

Musk Violates 5% Stake Disclosure Requirement
"Intentionally Delayed Disclosure to Profit from Stock Price Surge"

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, CEO of Tesla, for violating securities laws. The SEC alleges that Musk intentionally delayed disclosing his stake during his 2022 acquisition of Twitter (now X) to gain unfair profits.

According to CNBC, on the 14th (local time), the SEC submitted a complaint to the U.S. District Court in Washington D.C., seeking civil fines and disgorgement of ill-gotten gains from Musk. The allegation is that Musk purchased shares before acquiring Twitter for $44 billion (approximately 64 trillion KRW) in October 2022 but failed to disclose them in advance, thereby maximizing profits from the stock price increase.

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Under SEC regulations, investors must disclose when they acquire a 5% or greater stake in a company within 10 days. Musk, who had been steadily purchasing shares before the Twitter acquisition, was required to disclose his 5% stake by March 24, 2022, but reportedly only revealed his holdings in April of the same year after joining Twitter’s board.

The SEC pointed out, "Musk purchased about 3.5 million Twitter shares the day after the March 24 disclosure deadline, increasing his stake to 7%," and added, "By the time he disclosed his stake after joining the board, he already owned more than 9%." The agency also explained, "Following Musk’s disclosure, Twitter’s stock price rose more than 27%. Thanks to this secrecy, Musk was able to buy shares at artificially low prices, saving approximately $150 million (about 219.2 billion KRW)."

Musk’s legal team immediately pushed back. His attorney, Alex Spiro, told CNBC, "Musk did nothing wrong. Everyone sees this fraud for what it is," and criticized, "This trivial complaint, consisting of a single charge, is the culmination of a campaign that has harassed Musk for years."

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Foreign media noted that the lawsuit was filed less than a week before the inauguration of Donald Trump as U.S. president. Musk, known as the "First Buddy" and a key figure in Trump’s second administration, is expected to lead the Department of Government Efficiency (DOGE) and has announced plans to eliminate various regulations and downsize federal agencies.

Meanwhile, President-elect Trump has nominated Paul Atkins, a former SEC commissioner with a pro-cryptocurrency stance, as the next SEC chairman. Atkins, known as a strong supporter of digital assets and fintech (financial technology) companies, previously testified before Congress emphasizing the need to streamline SEC operations and reduce overlapping regulations and burdens on the industry.

This content was produced with the assistance of AI translation services.