Because of statements made before purchasing Twitter
US Securities and Exchange Commission takes action against Elon Musk
October 6, 2023, 7:35 a.m
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The US Securities and Exchange Commission is investigating Elon Musk because of his statements and several tensions surrounding the purchase of Twitter. In particular, a late declaration of his own shares in the company could come back to haunt him.
The US Securities and Exchange Commission (SEC) wants to force Elon Musk to testify in court in its investigation into his Twitter purchase. The authority did so on Thursday filed a lawsuit in San Francisco. She is examining Musk’s public statements and stock purchases around Twitter.
The tech billionaire completed the purchase of the online service at the end of October last year and has since renamed the platform to X. He had been buying Twitter shares since the beginning of the year. The SEC has been investigating the deal since spring 2022. According to the SEC lawsuit, Musk refused to testify in September after being subpoenaed, even though he initially agreed to be interviewed. His lawyer Alex Spiro told the financial service Bloomberg on Thursday that Musk had already stated several times in the investigation: “Enough is enough.”
Musk had made several U-turns on the Twitter deal. First he announced a shareholding he had quietly purchased and agreed to join the board of directors as a shareholder. He then announced that he wanted to buy the company completely instead. A few weeks after Twitter agreed to the $44 billion takeover, Musk wanted out of the deal. Twitter sued him to force him to comply with the agreement. After it became apparent that he was likely to lose the lawsuit, Musk gave in in the fall and completed the purchase.
Musk probably reported his shareholding too late
The SEC may have originally blamed the delay in announcing Musk’s Twitter holdings. Musk reached 9.2 percent of Twitter shares in March – but didn’t make this public until April. According to the rules, if the 5 percent mark in a listed company is exceeded, it must be announced within ten days.
Musk has been at loggerheads with the SEC for years. The confrontation was triggered by tweets in which Musk announced in August 2018 that he wanted to take the electric car manufacturer Tesla off the stock exchange. Specifically, the focus was on his claims that financing for such a deal was secured and that there was broad investor support for it. It later emerged that there were no written commitments from backers – and many important investors wanted Tesla to stay on the stock exchange. Musk abandoned the plan a little later.
The SEC accused Musk of misleading investors because of the sentence about allegedly secured financing. He and Tesla had to pay fines of $20 million each. Musk also had to give up his chairmanship of the board of directors and agree to have Tesla approve potentially price-sensitive tweets. He tried several times in vain to get rid of these reins.