Regulators from the Securities and Exchange Commission are reportedly investigating Elon Musk and his effort to procure Twitter shares before his offer to purchase the company.
The SEC investigation into Musk concerns the handling of his disclosure of stocks, according to a report from the Wall Street Journal. While the agency has not publicly confirmed this investigation as of Thursday, it would be the second regulatory investigation into Musk’s business conduct after becoming the presumed owner of Twitter.
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Musk acquired a 5% stake in Twitter as early as March 14, according to the Wall Street Journal. The SEC requires investors to file a form with the regulatory agency when their stake hits 5% so other stakeholders are aware of whether a person will attempt to gain control of the company. The billionaire did not disclose his shares until they were 9.2% on April 4, more than a week after the 10-day deadline that the SEC required.
The decision to delay the disclosure likely saved Musk $143 million, according to University of Pennsylvania accounting professor Daniel Taylor.
The SEC declined to comment.
The SEC is not the only regulatory agency investigating Musk for acquiring Twitter stock. The Federal Trade Commission is also determining whether Musk complied with antitrust reporting requirements when he bought stakes in the company and if an investigation is required. Members of Congress have asked FTC Chairwoman Lina Khan to disclose whether the left-leaning Open Markets Institute may be influencing her decision to investigate the matter.
Musk has a long-standing history with the SEC. Musk has often attacked the regulatory agency, claiming it targets him with investigations. Musk referred to the SEC as “b******s” during an appearance at TED 2022. He described the regulatory agency as the “shortseller enrichment commission” days after a 2018 settlement related to him stepping down as the chairman of Tesla’s board. Others, including fellow billionaire Mark Cuban, have argued that Musk’s attempt to purchase Twitter is him “f***ing with the SEC.”
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Musk’s $20 million 2018 settlement with the SEC requires some oversight of his online activities. A Tesla lawyer must review all of Musk’s tweets that could affect Tesla stock before he posts them, according to the settlement. Tesla has failed to adhere to that requirement, according to a July 2021 ruling. That failure led to Tesla shareholders suing Musk in December 2021, arguing his tweets affected the stock market. Musk filed a request on March 8 to scrap his 2018 settlement with the SEC, claiming the Twitter oversight condition has been “unworkable.” The request was denied on April 27.
Musk made news when he announced his 9.2% stake in the company on April 4. While he was initially offered a seat on the board of Twitter, the offer was later rescinded. A week later, Musk made an offer to acquire the company. The proposal was eventually accepted by the board on April 25.
