Technology

The S.E.C. Sent a Letter to Musk About His Twitter Shares in April

Securities and Exchange Commission clearly On Friday, Elon Musk began investigating the purchase of Twitter shares in early April and whether he properly disclosed his shares and intentions to social media companies.

In a filing with the regulatory agency, the authorities said they approached Mr. Musk on April 4. At the time, Musk, the wealthiest person in the world, had just become Twitter’s largest shareholder with a 9.2% stake in the company. Mr. Musk also submitted a securities document stating that the investment was passive and did not intend to pursue control of the company.

Ten days later, Mr. Musk offered $ 54.20 per share to fully purchase Twitter. Twitter later agreed to sell it to Mr. Musk for about $ 44 billion. The transaction is expected to close in the coming months.

and Letter to Mr. Musk On April 4, the SEC questioned whether he disclosed the shares at the appropriate time. The law requires shareholders who purchase more than 5% of a company’s shares to disclose ownership within 10 days of reaching that threshold. In a regulatory filing, Mr. Musk said he had crossed that threshold on March 14, but did not announce his purchase until April 4.

In that letter, the SEC also said that Musk really criticized Twitter’s content moderation policy and tweeted suggestions on how to change social media companies. I questioned whether he was a “passive” investor.

Some legal experts say it is “fraud” to apply as a “passive investor” when secretly planning to buy a company. They added that such cases are rarely prosecuted and difficult to prove.

The SEC declined to comment. Mr. Musk did not respond to the request for comment. Mr. Musk’s lawyer declined to comment.

The Federal Trade Commission is also investigating whether Mr. Musk violated disclosure requirements by not notifying the agency of his significant shares on Twitter. Investors typically need to notify antitrust regulators of large stock purchases and give government officials 30 days to confirm uncompetitive transactions.

Mr. Musk, who is also the CEO of electric car company Tesla and rocket maker SpaceX, was previously intertwined with the SEC. He faced regulatory investigations in 2018 when he announced plans to keep Tesla private on Twitter. That he secured the funds for the transaction.

The SEC said Mr. Musk was charged with securities fraud because the transactions mentioned by Mr. Musk were uncertain and funding was not restricted. Mr. Musk and Tesla settled for $ 40 million. Under the terms of the agreement with the regulatory agency, Mr. Musk must carry out a tweet by Tesla’s lawyer if it contains an important statement about the car manufacturer. Last month, Mr. Musk tried to end the tweet approval arrangement in court, but the judge rejected his request.

A shareholder proceeding against Mr. Musk over his tweet claiming to keep Tesla private is underway. Musk also faces a lawsuit from Twitter shareholders over delays in disclosure of shares in social media companies.

Related Articles

Back to top button