As a result, the SEC alleges, Musk was able to underpay “by at least 150 million dollars” (£123 million) for shares he bought after he should have disclosed his ownership of more than 5% of Twitter’s shares.
Musk bought Twitter in October 2022 and later renamed it X. He paid $44bn for the company, which is now valued at just $9.4bn, according to investment giant Fidelity.
The tech billionaire started amassing Twitter shares in early 2022, and by March of that year, he owned more than 5%.
At this point, the SEC complaint says, he was required by law to disclose his ownership, but he failed to do so until April 4, 11 days after the report was due.
Representatives for X and Musk did not immediately return a message for comment.
After Musk signed a deal to acquire Twitter in April 2022, he tried to back out of it, leading the company to sue him to force him to go through with the acquisition.
SEC said that in April 2022, it authorised an investigation into whether any securities laws were broken in connection with the purchases of Twitter stock and Musk’s statements and SEC filings related to the company.
Before it filed the lawsuit, the SEC went to court in an attempt to compel Musk to testify as part of an investigation into his purchase of Twitter.
The SEC’s chairman Gary Gensler plans to step down from his post when Donald Trump is inaugurated on January 20 and it is not clear if the new administration will continue the lawsuit.
Musk is close to the incoming Trump administration, and has promoted far-right and neo-Nazi politicians elsewhere around the world.