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Securities and Exchange Commission on Friday clarified It began investigating Elon Musk’s Twitter stock purchases in early April and whether he had accurately disclosed his stake and intentions for the social media company.
In a regulatory filing, the agency said it approached Mr Musk on April 4. Twitter’s largest shareholder owns 9.2 percent of the company. Mr. Musk also submitted a securities certificate stating that he plans to make the investment passive and has no intention of maintaining control of the company.
Ten days later, Mr. Musk offered $54.20 per share To buy Twitter directly. Twitter later admitted sold itself to Mr Musk for approximately $44 billion; The transaction is expected to close in the next few months.
In Letter to Mr. Musk On April 4, the SEC questioned whether it announced its stock at the right time. The law requires shareholders who buy more than 5 percent of a company’s stock to disclose their ownership within 10 days of reaching that threshold. In regulatory filings, Mr Musk said he crossed that threshold on March 14, but didn’t make his purchases public until April 4.
The SEC letter also questioned whether Mr Musk was truly a “passive” investor, given that he has publicly criticized Twitter’s content moderation policies and tweeted his advice on how the social media company should change.
Filing as a “passive investor” when secretly planning to take over a company “cheat” some lawyers said They added that such cases are rarely prosecuted and difficult to prove.
The SEC declined to comment. Mr Musk did not respond to a 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. Big share on Twitter. Investors generally must report large stock purchases to antitrust regulators to give government officials 30 days to review the transaction for antitrust violations.
Mr. Musk, who is also the CEO of electric car company Tesla and rocket manufacturer SpaceX, has previously been involved with the SEC. In 2018, he said on Twitter that he was funding Tesla privately and for the deal.
The SEC accused Mr Musk of securities fraud because he said the transaction he was referring to was unclear and the funding was not locked. Mr. Musk and Tesla agreed on $40 million. Under the terms of his deal with the regulator, Mr. Musk has to publish his tweets by a Tesla lawyer if they contain important statements about the automaker. Last month, Mr. Musk tried to end it. tweet confirmation edit in court, but a judge denied his request.
A shareholder lawsuit is pending against Mr Musk over a tweet that he claims plans to buy Tesla privately. Mr. Musk is also facing a lawsuit from Twitter shareholders for the delayed announcement of his acquisition of shares of the social media company.
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