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Wednesday, Dec 07, 2022

Elon Musk now under investigation, broken rules saved him $143 million

Elon Musk now under investigation, broken rules saved him $143 million

The Securities and Exchange Commission is investigating Elon Musk's late disclosure of Twitter. “Musk initially filed as a passive investor, despite making pronouncements about how the company should change “.
The Securities and Exchange Commission confirmed on Friday it had asked Tesla chief executive Elon Musk about irregularities in how and when he disclosed his investment in Twitter.

In a letter dated April 4, the day Musk’s investments in the company became public through a filing, the regulator asked him why he listed his stake as passive while making public statements about the company. It also asked him why he missed a 10-day deadline for disclosing his investment.

Musk changed his investment status to active the following day.

The letter confirms that the SEC is investigating the circumstances of Musk’s purchase of Twitter shares, which began in early 2021 and has culminated in his deal to take over the entire company for $44 billion. The investigation could lead to a fine, but is unlikely to affect the deal itself. The Wall Street Journal reported earlier in May that the SEC was investigating Musk’s purchases.

Musk has frequently sparred with the SEC in the past, and paid a $20 million fine in 2018 for allegedly misleading investors when he tweeted that he had gathered enough funding to take Tesla private.

While buying Twitter shares, he missed the deadline to notify the market by 11 days, allowing him to continue buying shares at a lower price than what they might have been had other investors known he was buying. The delay potentially saved him $156 million, according to securities experts.

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