DETROIT (AP) – Elon Musk says the Securities and Exchange Commission wants him to pay penalties or face criminal charges involving what he disclosed — or failed to disclose — about his purchase of Twitter stock before buying the social media platform in 2022.
In a letter posted by Musk on the platform that is now called X, his lawyer Alex Spiro tells the outgoing SEC chairman, Gary Gensler, that the commission’s demand for payments is a “bad plan” that does not threaten Musk. The letter also says the commission reopened an investigation this week into Neuralink, Musk’s computer-to-human brain interface company.
The SEC did not release the letter. And it wouldn’t comment on it or confirm whether it made the claim to Musk.
“It is the policy of the SEC to conduct investigations confidentially to protect the integrity of its investigations,” an agency spokesperson said in an email on Friday.
Messages were also left Friday with The Associated Press seeking comment from Spiro.
In the letter, Spiro says he is responding to requests from SEC staff about a multi-year investigation into “certain purchases, sales and releases of Twitter shares.” In addition, Spiro wants to know who directed the actions.
Musk bought Twitter in October 2022 for $44 million. But a lawsuit filed by a Twitter customer in April 2022 accused Musk of violating a deadline to disclose that he had accumulated a 5% stake. Instead, according to the complaint, Musk failed to disclose his position on Twitter until he nearly doubled his stake to more than 9%.
The strategy, the lawsuit alleges, hurt ordinary investors who sold shares in the San Francisco company in the two weeks before Musk admitted he had a large stake on Twitter.
Finally, the release of Musk’s share in Twitter caused the value of its shares to rise by 27% from the April 1 close to about $50 at the end of trading on April 4. That delay was not appropriate, according to the lawsuit, deprived the investors who had sold. Shares before Musk’s involvement in the company were publicly known about the possibility of significant gains.
Musk has been involved in an ongoing battle with the SEC since 2018. That’s when he and Tesla, his electric car company, each agreed to pay $20 million in fines over tweets Musk had made about raising the money needed to take Tesla on its own. Such a change never happened; Tesla remains a public company.
Musk sought to overturn part of the settlement that required him to have his articles about Tesla reviewed by Tesla’s attorney. That arrangement, he had argued, violated his free speech rights. The dispute went to the Supreme Court, which denied Musk’s request without comment.