Elon Musk is being investigated over details of his potential Twitter purchase, with federal regulators saying he was slow to complete a key form in the process, according to the Wall Street Journal.
According to a report by The Wall Street Journal, the Securities and Exchange Commission is investigating Elon Musk’s failure to timely disclose his massive purchase of Twitter stock last March. As a reminder, the billionaire took too long to file the required public form as he was in the process of buying back 9.2% of Twitter shares and becoming the company’s largest shareholder.
This discrepancy enabled him in particular tobuy more shares without alerting other shareholders, and therefore save a significant amount of money in the process. Musk is also the subject of a lawsuit by Twitter shareholders and a separate investigation by the FTC over the same matter.
Investigation could derail Twitter takeover
Because of these new investigations into the transaction, Twitter’s stock has fallen more than 10% since Elon Musk’s first proposal. As of Thursday’s market close, the stock was trading at $45.08, well below the $54.20 Musk agreed to pay on April 27. The difference is more than $9 billion in market value.
An investment company had also advised the billionaire to withdraw from the deal and pay the $ 1 billion penalty for breach of contract to be able to make a new, smaller offer that would better correspond to the current value of the business. Although Twitter’s board has already approved the purchase, the transaction could take months to close, and there can be no assurance that it will. The investigation will have to determine if Elon Musk’s actions have had a significant impact on other investors. For now, it’s unclear what penalties Musk could face if the SEC decides to take action against him.
Elon Musk himself announced on his personal account a little earlier today thathe had suspended the redemptionthus doing losing another 25% in Twitter stock in pre-market trading. For now, the CEO of Tesla would wait for more details on the volume of fake accounts present on the platform. According to him, spam and scam accounts accounted for less than 5% of monetizable daily usersbut this figure remains to be proven.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022