Washington The U.S. Securities and Exchange Commission (SEC) has scrutinized the entry of tech billionaire Elon Musk as a major investor in Twitter. The authority already demanded information from the Tesla CEO on April 4 about compliance with regulations when disclosing his Twitter involvement. This is according to a letter to Musk, which the regulator published on Friday. Shareholder lawsuits accuse Musk of market manipulation and securities fraud for late SEC mandatory disclosures. He himself has not yet commented.
In the letter, the SEC points out to Musk that he probably did not disclose his investment in Twitter in accordance with regulations. On April 4, Musk announced that he would hold more than nine percent of the company. In the USA, investors are obliged to report holdings of more than five percent within ten days. Musk has failed to do that. Shareholders of Twitter have already sued him for this reason. They believe that by disregarding the rule, he could continue to buy shares cheaply and expand his stake.
The SEC’s letter is not only about the reporting deadlines, but also about the type of disclosure. For example, Musk had initially submitted a form classifying him as a so-called passive investor who has no influence on the company’s management. But Musk was heavily involved in management issues from the very beginning and then launched a takeover plan without further ado. Twitter ultimately agreed with this. However, it is currently uncertain whether the deal will succeed. Musk subsequently changed the form to one for active investors.
Musk has been at loggerheads with the SEC for years. The agency sued him in 2018 for misleading tweets. Among other things, Musk had tweeted that he wanted to take Tesla off the stock exchange and secured funding for it. However, according to the SEC, this did not correspond to the truth. During a settlement, the Tesla BOSS agreed to a fine. He also had to temporarily resign as chairman of the Board of Directors and has since had certain tweets relevant to the stock market examined by a lawyer. But Musk mocked the SEC afterwards and continued to tweet cheerfully.
