'Paid significantly less': SEC sues Elon Musk for allegedly failing to disclose Twitter stake before buyout

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against billionaire Elon Musk, accusing the owner of X of violating securities laws by acquiring a significant number of Twitter shares without properly disclosing the information.

Musk began purchasing Twitter shares in early 2022 and had increased his stake in the social media platform to 5% by March 14, 2022. However, as alleged by SEC, he failed to disclose his stake to the U.S. regulator within the required timeframe, missing the deadline by 10 days. This triggered a legal battle with shareholders.

The lawsuit, filed in federal court, alleges that had Musk and his wealth manager disclosed his ownership as required, Twitter’s stock price would have likely surged.

“Musk paid significantly less for the shares of Twitter common stock he purchased between March 25, 2022, and April 1, 2022, than he would have if he had disclosed his stake in a timely manner,” the lawsuit states.

By April 4, 2022, Musk had become Twitter’s largest shareholder, holding a 9.2% stake—more than four times the 2.25% stake held by Twitter founder Jack Dorsey.

On April 13, 2022, some Twitter investors filed a complaint in a New York federal court, alleging that Musk had deliberately delayed disclosing his stake to buy shares at a lower price. The following day, Musk announced his intent to buy out the social media platform for $43 billion, offering $54.20 per share—a 54% premium over Twitter’s closing stock price on April 1, 2022, the last trading day before he acquired a majority stake.

By April 21, Musk had secured $46.5 billion in funding for the acquisition. This included $25.5 billion in debt financing from Morgan Stanley and other banks and $21 billion in equity financing from his own assets. After discussions, Twitter shareholders accepted Musk’s buyout proposal at $54.20 per share. Three weeks after acquiring his stake, the Tesla CEO finalised an agreement to purchase Twitter for $44 billion, taking the publicly listed company private.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk had said at the time.

The latest lawsuit is being seen as one of the final moves under SEC Chair Gary Gensler, who is expected to step down this month after President-elect Donald Trump pledged to fire him. It is still unclear whether the next SEC chair will continue pursuing the case.

Meanwhile, Trump has reportedly chosen Musk to lead a newly created Department of Government Efficiency in his second administration. “This will send shockwaves through the system, and anyone involved in government waste—which is a lot of people!” Musk had said right after his appointment.