MUSK SAVED $150 MILLION ON TWITTER STOCK BY LYING TO SEC!

SEC v. Elon Musk — U.S. Securities and Exchange Commission Litigation Release No. 26219, dated January 14, 2025.

The SEC charged Elon Musk for failing to timely file a beneficial ownership report after acquiring over 5% of Twitter's stock. This delay allowed him to purchase additional shares at artificially low prices, costing investors at least $150 million. The SEC seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties.

In Plain English

Imagine you're buying a lot of shares in a company, like collecting rare trading cards. There's a rule that says if you buy more than a certain amount (like 5% of all the cards), you have to tell everyone publicly within 10 days. Elon Musk bought a lot of Twitter shares but didn't tell anyone for a while. Because he kept quiet, he was able to buy even more shares at a lower price than they should have been, like getting a rare card for way less than it was worth because no one knew how much someone else wanted it. This cost other people who sold their shares about $150 million.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Acquiring Significant Shares In early 2022, Elon Musk began buying shares of Twitter, Inc. common stock. By March 14, 2022, he had acquired beneficial ownership of more than five percent of the company's outstanding shares.
2. Reporting Deadline Missed Under Section 13(d)(1) of the Exchange Act and Rule 13d-1, Musk was required to file a beneficial ownership report (Schedule 13D) within ten calendar days of crossing the five percent threshold. This deadline was March 24, 2022.
3. Continued Purchases at Low Prices Despite missing the March 24, 2022 deadline, Musk continued to purchase Twitter shares between March 25, 2022, and April 1, 2022. He spent over $500 million during this period.
4. Undisclosed Ownership Advantage The SEC alleges that because Musk failed to timely disclose his beneficial ownership, he was able to buy shares at artificially low prices. The public was unaware of his significant stake and investment purpose, which would have influenced pricing.
5. Investor Harm Alleged As a result of the delayed filing and subsequent purchases at suppressed prices, Musk allegedly underpaid by at least $150 million for his Twitter shares. Investors who sold shares between March 25 and April 1, 2022, did so at artificially low prices, suffering substantial economic harm.
6. Belated Public Disclosure Musk finally filed a beneficial ownership report with the SEC on April 4, 2022, disclosing his acquisition of over nine percent of Twitter's stock. The day after this disclosure, Twitter's stock price increased by more than 27%.

The Enforcement Action

The SEC filed an action against Elon Musk in the U.S. District Court for the District of Columbia, charging him with violating Section 13(d) of the Exchange Act and Rule 13d-1 thereunder for failing to timely file a beneficial ownership report. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.

Named in this action: Elon Musk.

Original SEC litigation release ↗ · Browse all cases