He’s also facing an investor lawsuit and an FTC investigation.
According to The Wall Street Journal, the US Securities and Exchange Commission (SEC) is looking into Elon Musk’s late disclosure of his purchase of more than 5% of Twitter’s stock. The lag allowed him to buy more stock without alerting other shareholders, which could have saved him a lot of money. Musk is also facing a lawsuit from Twitter shareholders, as well as an FTC investigation into the same matter.
Musk disclosed his stock purchase on April 4th, ten days later than the law requires. According to the WSJ’s expert, not reporting the trade likely saved him more than $143 million because the share price would have been higher had the market known about his stake. He eventually purchased 9.2% of Twitter, which made him the company’s largest shareholder.
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In his initial filing, Musk said he was a passive shareholder, but the following day he filed a form that showed more involvement, including an offer to join the board of directors. A week later, he submitted an offer to buy Twitter for $44 billion, which has been approved by Twitter’s board. Musk has said that he’ll unlock the “extraordinary potential” of the site and that the deal will be good for free speech.
Musk has butted heads frequently with the SEC over the past few years. In February, he asked a judge to overturn his agreement with the SEC that required him to get approval for tweets, accusing the Commission of conducting a “harassment campaign.” That request was denied, as was Musk’s request to block an SEC subpoena related to possible insider trading.
Musk was also hit with a class-action lawsuit over his Twitter investment. The SEC appears to have a good case against Musk for the late disclosure, but it’s not yet clear what it plans to do. However, the lawsuit is unlikely to stop Musk’s purchase of Twitter, according to the WSJ.
