The US Securities and Exchange Commission is accusing Elon Musk of cheating shareholders out of $150 million by not disclosing his secret 2022 purchase of 10% of Twitter shares, as was legally required.

When this whole Elon Musk buying Twitter in a hostile takeover thing began in spring 2022, it all came to light when news broke that Musk had bought nearly 10% of all Twitter shares. That information came from regulatory filings. But Musk had been secretly acquiring those Twitter shares for weeks, and not disclosing this, as it would have driven the share price up and made the remaining shares he coveted more expensive.

And the people whose shares Musk bought got cheated, the SEC now says, because they sold at artificially lower prices, as public knowledge of Musk’s Twitter-stock buy-up would have made the stock price spike. After all, look at the chart below, which shows the trajectory of Twitter’s stock price once news broke on April 4, 2022 that Musk had bought those shares.

Now in the final days of the Biden administration — and with Musk set for a very powerful but nebulous role in the Trump administration — Bloomberg reports that the US Securities and Exchange Commission (SEC) is suing Musk for cheating shareholders by failing to reports his large purchases of Twitter stock within the legally required timeline.

“Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices,” the SEC says in the lawsuit. “Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm.”

The SEC seems to be angling for a $200 million settlement out of Musk, which they reportedly already floated in December. That’s far larger than the last time they busted him, in a 2018 securities fraud case where both he and his electric car company Tesla had to pay $20 million apiece over the infamous and completely false "funding secured” tweet over taking Tesla private, which costed investors billions. Musk was forced to step down as Tesla’s chairperson over that one.

Musk’s (very busy) attorney Alex Spiro says the SEC is just out to get his rich and famous client.

“The SEC’s multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count ticky tak complaint against Mr. Musk under Section 13(d) for an alleged administrative failure to file a single form — an offense that, even if proven, carries a nominal penalty,” Spiro said in a statement picked up by Bloomberg.

But will this lawsuit immediately be dismissed once Trump takes office, given that Musk is now a high-ranking Trump acolyte? That seems somewhere between possible and likely. Trump has already named Paul Atkins as his pick for SEC chair, and Atkins is a big crypto guy (like Musk) who has generally opposed penalties against corporations and their owners.

In a sense, Twitter shareholders still got a sweetheart deal in the Musk purchase, as Musk paid the wildly inflated price of $54.20 per share (and remember, he was forced to make that purchase kicking and screaming, and he only went through with it because the courts forced him to).  

But those who’d previously sold their shares to Musk at a fraction of the $54.20 price certainly feel they got cheated. And they have their own separate class action lawsuit against Musk currently winding its way through the courts.

Related: It's the Biden Administration's Fault That Big Tech Embraced Trump, Says Marc Andreessen [SFist]

Image: WASHINGTON, DC - DECEMBER 05: Tesla CEO Elon Musk, Co-Chair of the newly announced Department of Government Efficiency (DOGE), arrives on Capitol Hill on December 05, 2024 in Washington, DC. Musk and his Co-Chair, businessman Vivek Ramaswamy are meeting with lawmakers today about DOGE, a planned presidential advisory commission with the goal of cutting government spending and increasing efficiency in the federal workforce. (Photo by Anna Moneymaker/Getty Images)