Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. SEC looking into Musk's Twitter stake purchase

Stock Markets May 27, 2022 04:41PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Elon Musk's Twitter profile is seen on a smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration

By Pete Schroeder and Nivedita Balu

WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission (SEC) is looking into Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk's disclosure of his stake in Twitter Inc (NYSE:TWTR) in early April, according to a letter the agency sent to him that month.

In the letter, now made public by the SEC, the regulator asks Musk why it appears he did not file required paperwork within 10 days of the acquisition, and also questions why, when Musk did disclose his stake, he used a form meant for passive investors while he was openly questioning Twitter's policies around free speech.

Specifically, the SEC asked Musk to explain why he opted to initially file a "13G" disclosure form, which is meant for investors who plan to hold their shares passively instead of a "13D" form, which is for activist investors who intend influence management and policies of the company. He later amended the filing. Musk was offered a board seat shortly after his initial disclosure and has since gone on to attempt to buy the company outright in a $44 billion deal to take it private.

Spokespeople for Musk did not immediately respond to a request for comment. An SEC spokesperson declined to comment.

Separately, Twitter said in a filing Friday it was not accepting the resignation of Egon Durban, a Musk ally, from its board. Two days earlier, Twitter shareholders had blocked his re-election, but the company said he brought "unparalleled operational knowledge of the industry" and instead he would reduce his board roles elsewhere.

Outside experts had previously said Musk's late filing and apparently improper paperwork could attract the attention of the SEC, which has sparred with Musk in the past.

But the financial consequences for the world's richest man could be limited, as fines for such a misstep would likely rise to a few hundred thousand dollars, according to outside experts. And others were skeptical it could endanger Musk's efforts to acquire Twitter.

"I think from that investigation standpoint, the SEC is going to have a pretty strong case that he's violated securities laws," said Josh White, a finance professor at Vanderbilt University who previously worked at the SEC as a financial economist. However, he added it "would be disastrous if [the SEC] said, well, this Twitter deal is on hold because Musk filed the wrong form."

"Twitter stock price would instantly drop ... I don't think that the Commission has an interest in necessarily standing in the way of the deal."

The SEC's letter is dated the same day Musk disclosed a 9.2% stake in Twitter. The billionaire has been sued by investors claiming he manipulated the company's stock price downward and profited by not disclosing his investment on time.

The Tesla Inc chief executive officer has landed in trouble with the SEC before, when the agency sued him in 2018 after he tweeted he had "funding secured" to potentially take the electric car company private at $420 per share. In reality, a buyout was not close.

However, Reuters has reported that the SEC has previously been reluctant to take Musk to court over perceived violations of the resulting settlement out of concern they might lose the case, and instead has opted to simply urge him to comply.

Shares of Tesla were up 5.75% in midday trading, while Twitter shares were up 2.2%.

U.S. SEC looking into Musk's Twitter stake purchase
 

Related Articles

Dow Futures Trade Lower After Positive Week
Dow Futures Trade Lower After Positive Week By Investing.com - Jun 26, 2022 9

By Oliver Gray  Investing.com - U.S. stock futures were trading lower during Sunday's evening deals, easing from a major rebound last week as investors monitored growing recession...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
R Ravi Sankar
R Ravi Sankar May 30, 2022 9:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
How can you compare Tesla and Twitter? One is a product created out of unparalleled passion and innovative genius of a rare kind while the other is a phony hyperpolitical and unabashedly biased advocacy platform masquerading as an open social media.
John Laurens
John Laurens May 28, 2022 9:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oh look! Another faction of the leftist fascist dem deep state is "looking into" another conservative... TOTAL SHOCK FACE!!!
Roger Miller
Roger Miller May 27, 2022 12:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are they also looking into Twitter’s filings, particularly their estimates of fake accounts, which if under reported would be defrauding both investors and advertisers?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email