According to the SEC, Musk delayed filing a beneficial ownership report. Credit: Omar ElDeraa/Shutterstock.

The US Securities and Exchange Commission (SEC) has filed a complaint against X (formerly Twitter) owner and executive chairman Elon Musk, alleging that he violated federal securities laws by failing to promptly disclose his acquisition of a significant stake in Twitter.

According to the SEC, Musk delayed filing a beneficial ownership report, allowing him to continue purchasing Twitter shares at lower prices.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

The SEC alleges that Musk’s actions breached the beneficial ownership reporting requirements outlined in the Securities Exchange Act of 1934, specifically Section 13(d) and Rule 13d-1.

These provisions mandate that individuals who acquire beneficial ownership of more than 5% of a company’s stock must disclose their holdings in a timely manner.

The complaint, filed in the US District Court for the District of Columbia, claims that Musk began acquiring Twitter shares in early 2022.

By March 24, 2022, he had exceeded the 5% ownership threshold but did not file the required disclosure with the SEC.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Instead, Musk continued purchasing shares, acquiring more than $500m worth of Twitter stock between March 25 and April 1, 2022.

The SEC alleges that Musk’s delayed disclosure prevented the market from factoring in the information about his significant stake in Twitter, enabling him to acquire shares at prices lower than they would have otherwise been.

The complaint estimates that Musk saved at least $150m by purchasing stock at these artificially low prices, to the detriment of shareholders who sold their shares during this period.

The SEC claims that Musk’s failure to file timely disclosures caused substantial economic harm to investors who sold their shares before the market became aware of his substantial ownership and intentions regarding Twitter.