The SEC sent a letter to Musk about his Twitter actions in April

The Securities and Exchange Commission on Friday revealed who began probing Elon Musk’s Twitter share purchases in early April and whether he had properly disclosed his participation and intentions for the social media company.

In a regulatory filing, the agency said it contacted Mr. Musk on April 4. At the time, Mr. Musk, who is the richest man in the world, had just become The largest shareholder of Twitter with a 9.2% stake in the company. Mr. Musk also filed a document of guarantee stating that he expected the investment to be passive and that he did not intend to pursue control of the company.

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

in a letter to Mr. Musk on April 4, the SEC questioned whether it had disclosed its stake at the right time. The law requires shareholders who purchase more than 5% of a company’s shares to disclose their ownership within 10 days of reaching that threshold. In regulatory documents, Musk said he crossed that threshold on March 14, but didn’t make his purchases public until April 4.

In its letter, the SEC also questioned whether Mr. Musk was truly a “passive” investor, as he had already publicly criticized Twitter’s content moderation policies and tweeted recommendations on changing the social media company.

Presenting yourself as a “passive investor” while secretly planning to take over a company is “fraudulent,” some legal experts said. Such cases are rarely prosecuted and difficult to prove, they added.

The SEC declined to comment. Mr. Musk did not respond to a request for comment. An attorney for Mr. Musk declined to comment.

The Federal Trade Commission is also investigating whether Mr. Musk violated disclosure requirements by failing to notify the agency. considerable share in Twitter. Investors typically need to notify antitrust regulators of large stock purchases to give government officials 30 days to review the transaction for competition infringement.

Musk, who is also the CEO of electric car company Tesla and rocket maker SpaceX, has already had problems with the SEC. He faced an investigation by the regulator in 2018 when he announced on Twitter that he planned to take Tesla privately and secured funding for the deal.

The SEC accused Musk of stock fraud because he claimed the transaction he was referring to was uncertain and that the funding had not been blocked. Mr. Musk and Tesla agreed for $ 40 million. Under the terms of his deal with the regulator, Mr. Musk must post his tweets from a Tesla attorney if they contain material statements about the automaker. Last month, Mr. Musk tried to put an end to the tweet approval provision in court, but a judge denied his request.

A shareholder lawsuit is pending against Mr. Musk over his tweet in which he claimed he planned to deprive Tesla. Mr. Musk also faces a lawsuit from Twitter shareholders for his delayed disclosure of his purchases of shares in the social media company.

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