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

The Securities and Exchange Commission on Friday revealed that it had launched an investigation into Elon Musk’s acquisition of Twitter shares in early April to find out whether he had properly disclosed his stake and his intentions to the social media company.

In a regulatory document, the agency said it had addressed Mr Musk on 4 April. At the time, Mr. Musk, the world’s richest man, had just become Twitter’s largest shareholder with 9.2 per cent. Mr Musk also presented a securities document stating that he was planning a passive investment and that he was not going to exercise control of the company.

Ten days later, Mr. Musk offered a $ 54.20 promotion to buy Twitter live. Twitter later agreed to sell itself to Mr. Musk for about $ 44 billion; The transaction is expected to be completed in the coming months.

In a letter to Mr Musk dated 4 April, the SEC questioned whether he had cast his share at the right time. The law requires shareholders who buy more than 5 percent of a company’s stock to declare their ownership within 10 days of reaching that limit. In regulatory documents, Mr Musk said he crossed that threshold on March 14 but did not publish the purchases until April 4.

In its letter, the SEC also questioned whether Mr Muskie was really a “passive” investor, given that he had already publicly criticized Twitter’s content moderation policy and published recommendations on how to change the social media company.

According to some legal experts, presenting yourself as a “passive investor” when you are secretly planning to seize a company is “fraudulent”. They added that such cases are rare 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 considering whether Mr. Musk violated the disclosure requirements by not informing the agency of his large stake in Twitter. Investors typically need to notify antitrust regulators about the purchase of large shares to give government officials 30 days to consider a transaction for antitrust competition.

Mr Muskie, who is also the CEO of electric car company Tesla and rocket maker SpaceX, was previously entangled with the SEC. He was challenged by a regulator investigation in 2018 when he announced on Twitter that he intended to own Tesla privately and privately. That he had secured the financing of the transaction.

The SEC accused Mr Musk of securities fraud because it said the transaction he referred to was unclear and funding was not locked. Mr. Musk and Tesla totaled $ 40 million. Under the terms of the contract with the regulator, Mr. Musk must post his tweets by a Tesla lawyer if they contain material statements about the car manufacturer. Last month, Mr. Musk tried to terminate the tweet approval agreement in court, but a judge denied his request.

The shareholder lawsuit against Mr. Musk over his Twitter claim that he intended to give Tesla a private lease continues. Mr. Musk is also facing lawsuits over Twitter shareholders for delayed disclosure of a purchase of shares in the social media company.

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