The US Securities and Exchange Commission has filed a lawsuit against a prominent figure in the tech industry for allegedly failing to disclose his ownership of a major social media platform, X, formerly known as Twitter. The lawsuit claims that the individual, who recently closed a $44 billion deal to acquire Twitter, began acquiring a substantial number of Twitter shares before the deal was finalized. By mid-March 2022, the individual owned over 5% of the company's common stock but failed to disclose this information to the SEC within the required timeframe.
The lawsuit alleges that had the individual disclosed his ownership as mandated, the stock price of Twitter would likely have seen a significant increase. It is claimed that by keeping these purchases undisclosed, the individual underpaid Twitter investors by more than $150 million for his acquisitions of Twitter common stock during the period in question.
Furthermore, the lawsuit states that the individual increased his stake in Twitter to over 7% by the end of March 2022 and continued to make significant purchases of shares in the following days. It is noted that after formally disclosing his stake in early April 2022, the stock price of Twitter surged by more than 27%.
The lawsuit also highlights that the individual paid considerably less for Twitter shares during a specific time frame due to the delayed disclosure, spending over $500 million on shares during that period. The legal action is seen as one of the final moves under the current SEC Chair, who is stepping down this month.
It remains uncertain whether the incoming SEC head will pursue the lawsuit, given the individual's close ties to a prominent political figure. The SEC has been investigating the individual over his acquisition of the social media platform, with previous demands for a fine to settle charges related to his Twitter share purchases.
Notably, the individual had faced issues with the SEC in the past for failing to appear for testimony in an earlier investigation. The lawsuit marks a significant development in the ongoing scrutiny of high-profile individuals in the financial and tech sectors.
