Detroit: Elon Musk says the Securities and Exchange Commission wants him to pay a penalty or face charges involving what he disclosed — or failed to disclose — about his purchases of Twitter stock before he bought the social media platform in 2022.
In a letter posted by Musk on the platform now called X, his lawyer Alex Spiro tells the outgoing SEC chairman, Gary Gensler, that the commission’s demand for a monetary payment is a “misguided scheme” that won’t intimidate Musk. The letter also alleges that the commission reopened an investigation this week into Neuralink, Musk’s computer-to-human brain interface company.
The SEC has not released the letter. Nor would it comment on it or confirm whether it has issued such a demand to Musk.
“It is the policy of the SEC to conduct investigations on a confidential basis to preserve the integrity of its investigative process,” an agency spokesperson said in an email Friday.
Messages also were left Friday by The Associated Press seeking comment from Spiro.
In the letter, Spiro says he is responding to demands from SEC staff members about a multi-year investigation of “certain purchases, sales and disclosures of Twitter shares.” In addition, Spiro is demanding to know who directed the actions.
Musk bought Twitter in October 2022 for USD 44 billion. But a lawsuit filed by a Twitter investor in April 2022 accused Musk of violating a regulatory deadline to reveal that he had accumulated a stake of at least 5%. Instead, according to the complaint, Musk failed to disclose his position in Twitter until he had nearly doubled his stake to more than 9%.
That strategy, the lawsuit alleges, hurt ordinary investors who sold shares in the San Francisco company in the nearly two weeks before Musk acknowledged that he held a major stake in Twitter.
Eventually, the disclosure of Musk’s stake in Twitter caused the value of its shares to soar 27% from its April 1 close to nearly $50 by the end of trading on April 4. That improper delay, according to the lawsuit, deprived investors who had sold shares before Musk’s stake in the company was publicly known of the opportunity to realise significant gains.
Musk has been engaged in a running battle with the SEC since 2018. That was when he and Tesla, his electric car company, each agreed to pay $20 million in fines over tweets Musk had made about having amassed the necessary funding to take Tesla private. Such a transition never happened; Tesla remains a public company.
Musk sought to overturn part of the settlement that required him to have his postings about Tesla reviewed by a Tesla attorney. That provision, he had contended, violated his free speech rights. The dispute made its way to the Supreme Court, which rejected Musk’s appeal without comment.
Gensler, who was nominated to lead the SEC by President Joe Biden, announced last month that he would step down from his post on Jan 20, when Donald Trump will be inaugurated as president. Trump has announced that intends to nominate cryptocurrency advocate Paul Atkins to chair the SEC.
Trump has named Musk as co-chair of a “Department of Government Efficiency” to try to reform the federal government.
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