Court petition filed by Elon Musk seeking dismissal of SEC lawsuit concerning late disclosure of Twitter stock ownership
In a recent development, tech mogul Elon Musk finds himself in legal hot water once again with the U.S. Securities and Exchange Commission (SEC). On 14 January, 2022, the SEC filed a civil lawsuit against Musk, alleging that he violated federal securities law by failing to disclose his significant stake in Twitter within the required 10-day window.
According to the SEC's complaint, Musk acquired Twitter shares worth over $500 million between 24 March and 4 April, 2022, but did not disclose his stake until 25 April. This delay, the SEC claims, constitutes a breach of SEC rules that require investors to disclose within 10 calendar days when crossing a 5% ownership threshold.
Musk's legal team, however, maintains that there is no ongoing violation. They argue that Musk halted further purchases of Twitter shares and filed the disclosure one business day after his wealth manager consulted securities counsel.
The SEC's complaint also states that Musk purchased the Twitter shares at "artificially low prices." However, the SEC did not specify a monetary amount for the civil fine it seeks in this case.
This is not the first time Musk has clashed with the SEC. In a 2018 case, Musk faced scrutiny over his tweets suggesting he might take Tesla private and had secured funding. Musk's lawyers claim that the SEC is unfairly targeting him, and argue that the SEC action "reveals an agency targeting an individual for his protected criticism of government overreach."
Musk has since filed a motion to dismiss the civil lawsuit brought by the SEC. He has a court deadline to respond to the lawsuit by Friday, 29 August. As of now, the SEC has not responded to requests for comment outside business hours.
It's important to note that this article does not provide information about the SEC's response to Musk's claims. The SEC alleges that Musk late-filed a single beneficial ownership form three years ago, and fully corrected any alleged error immediately upon its discovery.
Trump appointed Musk as a special adviser on federal workforce and spending reductions around the same time the lawsuit was filed. The filing of the lawsuit preceded Donald Trump taking office as President by six days.
As the legal proceedings unfold, Musk continues to be a prominent figure in the tech industry, with his companies Tesla and SpaceX leading the way in electric vehicles and space exploration respectively. The outcome of this case could have significant implications for Musk's personal and professional reputation.
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