The US Securities and Exchange Commission (SEC) filed a legal action against Elon Musk, accusing him of failing to file a beneficial ownership report on time after acquiring more than 5% of Twitter’s outstanding shares, according to a statement by the regulatory authority.

This alleged violation of the Securities Exchange Act of 1934 allowed Musk to save at least $150 million at the expense of Twitter shareholders.

The SEC emphasised that these reporting requirements exist to ensure investors have the necessary information to make informed decisions, especially when individuals with the potential to influence a company’s control accumulate significant equity.  

According to the complaint, Musk should have filed the report by March 24, 2022, but instead continued purchasing more than $500 million worth of Twitter stock between March 25 and April 1, 2022. 

His failure to disclose his ownership allegedly kept stock prices artificially low, leading to financial losses for investors who sold their shares without knowledge of Musk’s stake.

The SEC has charged Musk with violating Section 13(d) of the Exchange Act, which carries a strict liability standard. The lawsuit, filed in the US District Court for the District of Columbia, seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

Before this, X was been sued by a former Twitter board member for $20 million. 

Omid Kordestani, former Twitter (now called X) executive chairman, has sued the social media platform, claiming that Musk refused to cash out more than $20 million worth of shares that belong to him, according to reports.

Reports further said that Kordestani had received most of his compensation in stock but after Musk bought the company, he allegedly refused to pay him for those shares, according to the lawsuit.

Musk or X were yet to comment on the lawsuit filed in California Superior Court in San Francisco.

Kordestani had joined Twitter’s board in 2015. He supervised the sale of the company to Musk in October 2022.

According to the lawsuit, X platform “seeks to reap the benefits of Kordestani’s seven years of service to Twitter without paying him for it”.

The Musk-run platform “refuses to meet those obligations, adding to a long list of unpaid bills accruing under Musk’s watch,” the lawsuit added.

Earlier, Parag Agrawal, former CEO of Twitter (now called X), and three other employees sued Elon Musk for about $128 million in unpaid severance. Agrawal, along with ex-chief financial officer Ned Segal, former Twitter head of legal and policy Vijaya Gadde and former Twitter General Counsel, Sean Edgett, filed the lawsuit.

The lawsuit claimed that the Tesla CEO showed "special ire" towards them by "publicly vowing to withhold their severance payments of around $200 million”, when he took over Twitter in 2022 for $44 billion.

According to earlier reports, the three top executives had an exit package of more than $100 million when they left the company.

(with inputs from syndicated feed)