Elon Musk, the once-and-future entrepreneur and CEO, currently has some legal problems. The Securities and Exchange Commission (SEC) recently made serious allegations against him. The SEC has brought a civil enforcement action against Musk. For one, they allege that he failed to transparently disclose his 2022 Twitter stock buys ahead of trying to buy the company. This development comes amidst Musk's financial backing of $290 million towards former President Donald Trump's potential White House comeback and his role as a top advisor to the president.
On March 14, a process server served a civil summons on Musk at SpaceX’s headquarters in Brownsville, Texas. The delivery was greeted by three security guards, one of whom claimed that the process server was trespassing. The SEC’s lawsuit against Musk is still very much ongoing. They claim that he misled them in his purchase of a large share of Twitter.
According to the SEC, on Christmas Eve Musk crossed the 5% threshold for his ownership of Twitter’s shares. He then doubled down to complete the acquisition of the company for approximately $44 billion. By law, shareholders must publicly disclose any holdings above 5% within 10 calendar days. Instead, Musk allegedly sat on this disclosure, not reporting this material information more than 10 days after the deadline.
The SEC contends that this delay permitted Musk to buy more shares at a lower price, harming other investors.
"allowing him to underpay by at least $150 million for shares he purchased after his financial beneficial ownership report was due." – Securities and Exchange Commission's civil complaint
This is not Musk’s first run-in with the SEC. He has already paid a $20 million fine to settle civil securities fraud charges related to Tesla. The current lawsuit adds another layer of complexity to Musk's multifaceted business ventures and advisory role within the political sphere.