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

The Securities and Exchange Commission revealed on Friday that he began reviewing Elon Musk’s early April purchases of Twitter shares a...

The Securities and Exchange Commission revealed on Friday that he began reviewing Elon Musk’s early April purchases of Twitter shares and whether he had properly disclosed his stake and intentions for the social media company.

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

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

In a letter to Mr. Musk dated April 4, the SEC questioned whether he disclosed his stake at the right time. The law requires shareholders who buy more than 5% of a company’s stock to disclose their ownership within 10 days of reaching this threshold. In regulatory filings, Mr. Musk said he crossed that threshold on March 14, but did not make his purchases public until April 4.

In its letter, the SEC also questioned whether Mr. Musk was truly a “passive” investor, given that he had previously publicly criticized Twitter’s content moderation policies and tweeted recommendations about how the media company social should be changed.

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

The SEC declined to comment. Mr. Musk did not respond to a request for comment. A lawyer for Mr. Musk declined to comment.

The Federal Trade Commission is also investigating whether Mr. Musk violated disclosure requirements by failing to inform the agency of his significant stake in Twitter. Investors generally must notify antitrust regulators of large stock purchases to give government officials 30 days to review the transaction for antitrust violations.

Mr Musk, who is also the chief executive of electric car company Tesla and rocket maker SpaceX, has dabbled in the SEC before. He faced a regulator investigation in 2018 when he announced on Twitter that he planned to take Tesla private and secured financing for the deal.

The SEC charged Mr. Musk with securities fraud because it said the transaction he was referring to was uncertain and the funding had not been locked. Mr. Musk and Tesla settled for $40 million. Under the terms of his agreement with the regulator, Mr. Musk must have his tweets enforced by a Tesla lawyer if they contain material statements about the automaker. Last month, Mr. Musk tried to end the tweet approval agreement in court, but a judge rejected his request.

A shareholder lawsuit against Mr Musk over his tweet claiming he planned to take Tesla private is pending. Mr Musk is also facing a lawsuit from Twitter shareholders over his late disclosure of his purchases of shares in the social media company.

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Newsrust - US Top News: The SEC sent a letter to Musk about his shares on Twitter in April
The SEC sent a letter to Musk about his shares on Twitter in April
Newsrust - US Top News
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