Bad news for Elon Musk, investigated by the Securities and Exchange Commission (SEC) for failure to disclose the purchase of Twitter stock within the deadline. A delay that, according to The Wall Street Journal, would have made him save over 143 million dollars. But let’s find out in more detail what Tesla CEO has been up to this time.
Elon Musk: SEC investigates entrepreneur for Twitter acquisition
Elon Musk is once again in trouble with the SEC. This time, as you can imagine, the issue concerns the entrepreneur’s acquisition of Twitter. Under the Securities Exchange Act of 1934, investors who acquire more than 5% of a publicly traded company are required to file a notification report with the SEC within 10 days of the acquisition. Elon Musk, as you can imagine, crossed the 5% mark with the Twitter acquisition, effectively setting the disclosure deadline on May 24th.
But this was not the only problem. Apparently, Musk waited for the deadline before buying even more shares, bringing his stake to 9.2%. And it then notified the SEC of the takeover on April 4, which is 11 days after it was due to do so. The question is quite elaborate. Twitter’s share price predictably rose following the announcement of Musk’s acquisition, closing 27% higher on the first day the market noticed its interest in the platform. The delay in notifying the SEC thus allowed him to buy new shares at a much lower price than what he would have sold. And this has certainly not benefited the market.
At this point, it’s clear why the SEC moved against Elon Musk. What the consequences of this investigation will be is not certain, but we know that so far the entrepreneur has not shown great respect for authority.