April 4, the same day Musk initially revealed he bought more than 9% of his stock. bet on Twitter (TWTR) And becoming the company’s largest shareholder, the SEC sent a letter to him asking why he delayed disclosing his stake due to securities law violations.
in a letter to musk, On Friday, the SEC asked him to “please advise why. [initial disclosure] It doesn’t appear to have happened within 10 days.” From the date he acquired more than 5% of the company’s shares.
Musk’s Twitter stake rose 5 percent on March 14, according to the document. In which case the disclosure of such bets should be made by March 24. Musk, in turn, waited 21 days – and effectively continued to accumulate shares in the company. A discount on what stocks will trade if such announcements are made.
Musk’s late disclosure has saved the billionaire by about $143 million by keeping its stock price below what it should have been. As he continues to buy shares, Daniel Taylor, an accounting professor at the University of Pennsylvania, predicts.
“I think it might be laziness or the belief that the rules don’t apply,” Taylor told CNN Business earlier this month. “But if you look at when the SEC enforces late filings, it’s quite rare from a cost-benefit basis It is reasonable not to file a complaint. Even if late reporting costs are fined $100,000 or millions of dollars in fines, why wouldn’t he? [delay filing]?”
The SEC also asked why Musk initially filed disclosures for passive investors who didn’t plan to use their influence on the changes Musk had previously shown the company. Several comments on Twitter said he felt the need to make changes to the platform.
“Your answer should mention above all Your recent public statements on the Twitter platform were about Twitter … including statements that questioned whether Twitter (the issuer) strictly adheres to the ‘free speech principle’,” the SEC said in the letter.
Musk and the SEC did not immediately respond to requests for comment. Twitter declined to comment.
The letter added another complex factor to the already fraught deal. In recent weeks Musk has raised questions about the acquisition, saying: “Pending” details about the number of spam accounts on the platform. Despite waiving due diligence for the transaction, Twitter has said it still “Committed to completing the transaction at the agreed price and terms.”
the Tesla (TSLA) The CEO has a long history with the SEC. In 2018, Musk tweeted that he It “was considering taking Tesla private at $420” and he “got solid funding,” fueling the frenzy and sending shares in the automaker up to $371 from $342, the SEC later said. that the fundraising was actually not secured and sued Musk for misleading investors. Musk eventually settled with the SEC for $20 million and renounced the position of Tesla chairman.
Musk has struggled with the provisions of the deal, which required him to tweet about Tesla, which was reviewed by a lawyer before they were posted. and made a number of disparaging comments about the agency. But a judge last month declined to end the deal. saying in his judgment that “Musk’s argument has no effect.”
