Billionaire allegedly concealed stock purchases to avoid price increases, causing investors $150 million in losses; SEC denounces strategy used by Elon Musk in Twitter acquisition.
Elon Musk, the eccentric billionaire and CEO of giants like Tesla and SpaceX, is once again embroiled in controversy. This time, he faces accusations of defrauding investors in the purchase of Twitter, now called X. Did he really bend the rules to make more money? Let's explore this intriguing case that mixes business, law and, of course, Musk's unique personality.
Twitter's silent stock buy
In the financial market, big players like Musk need to follow a well-defined manual. One of these rules requires investors to notify the U.S. Securities and Exchange Commission (SEC) when their stake in a company exceeds 5%. This prevents billion-dollar movements from negatively impacting small investors.
Musk, however, appears to have ignored this rule as he increased his Twitter stake in 2022. He crossed the 5% threshold in March but only notified authorities in April, by which time his stake had reached 9,2%. This strategic delay may have been key to keeping prices low while he continued buying.
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Musk’s tactic appears to have been simple: keep quiet to save money. By not disclosing his intentions, he avoided a market reaction to the news, which would have driven up Twitter’s stock price. When the purchase was finally revealed, the stock soared 27%. According to the SEC, this resulted in an estimated $150 million in losses for other investors.
The SEC Investigation: A Costly Move
The SEC is like a referee in the financial game, making sure everyone follows the rules. In Musk’s case, the commission alleges that he broke the rule by failing to report his stock movements within 10 days of reaching a 5% stake. This failure to report his stocks is not just a technical violation; it is seen as an attempt at manipulation.
The SEC complaint alleges that Musk's strategy harmed small investors. The financial impact was significant: By hiding his purchases, he secured low prices for himself but left other investors unprotected. when the market finally reactedThe regulator considers this a serious violation, although Musk's lawyer downplays it as an "administrative error."
Musk's reaction: Attacks on the SEC and justifications
As usual, Musk wasted no time in using X to respond. He called the SEC “a completely failed organization” and questioned why the agency was focusing on him instead of dealing with more serious crimes. A typical response from the billionaire, who never backs down from controversy.
Musk's attorney Alex Spiro dismissed the charges as petty. He said they amounted to a minor form-filing error that, even if proven, would result in a minimal penalty. Spiro said the SEC was simply trying to "harass" Musk in a campaign that has been going on for years.
Political context: Regulators versus innovation
The scandal comes amid a turbulent political landscape. The SEC complaint was filed days before the inauguration of Donald Trump, who has supported reducing regulations in industries such as technology and finance. The clash between Musk and regulators reflects a larger struggle between innovation and government control.
Musk is no stranger to clashes with agencies like the SEC, NASA and the FAA. For him, these institutions often hinder progressBut are their bold methods a way to break paradigms or just risky strategies to make more money?