Elon Musk’s purchase of personally largest stake in Twitter is being investigated by US regulators after he delayed reporting the purchase – and thus failed to provide enough warning that a takeover bid was falling short .
The investigation, currently in its early stages, could spark a firestorm between business entrepreneurs and financial regulators, just as Musk is trying to wrap up his purchase of Twitter, approved on April 26.
It also comes amid speculation about what the world’s richest man will do on Twitter once he takes the reins. On Tuesday, he said he would allow Donald Trump to return to Twitter, in line with his previous announcements that he planned to err on the side of free speech instead of sanctions and censorship.
On Wednesday, co-founder and former CEO Jack Dorsey denied speculation that he had been brought back to head the Musk-owned company.
With Twitter expected to take two to three months to finalize the deal to take it private, speculation is rife as to what Musk will do.
The 50-year-old’s first step towards buying Twitter was to buy a 9.2 percent stake in the tech company in mid-February.
According to the Wall Street Journal, Elon Musk is being investigated by the SEC after he failed to disclose his purchase of Twitter shares required by law within five days.
Musk bought his 9.2 percent stake in mid-February, but didn’t disclose it until April 4. The price then soared, although it has been a rollercoaster since then.
But he did not disclose his purchases to the Securities and Exchange Commission (SEC) until at least 10 days later, April 4.
Any investor crossing a 5 percent stake must file a form with the SEC within 10 days. This serves as an early signal to stakeholders that a large investor may be trying to take control of the company.
Musk’s April 4 filing also described his stake as dormant, meaning he did not plan to take over Twitter or affect its management or business.
The next day, however, he was offered a position on Twitter’s board, and a few weeks later, the world’s richest man struck a $44 billion deal to buy the social media giant.
The SEC investigation was first reported by the Wall Street Journal on Wednesday.
Known for his candid Twitter posts, Musk has a long history of skirmishes with the SEC.
Recently, a US judge reprimanded him for requiring him to monitor his Tesla tweets to try to avoid a settlement with the SEC.
In April, The Information reported that the Federal Trade Commission was investigating whether Musk violated a law that requires companies and individuals to report certain large transactions to antitrust-enforcement agencies.
Dorsey, who stepped down as CEO in November to be replaced by Parag Agarwal, has been widely supportive of Musk’s moves and has been consulting with him on the company’s direction – recently, confirming that He and Musk discussed reinstating Trump, and agreed it was the right thing to do.
Jack Dorsey denies he wants to take over as Twitter CEO again, testifying before Congress in March 2021
When musician and YouTuber Charles Wienand tweeted: ‘I guess @elonmusk will eventually ask @Jack to be CEO of Twitter,’ Dorsey replied: ‘No, I’ll never be CEO again.’
Asked who the CEO should be, Dorsey replied: ‘No one after all.’
Bloomberg technology editor Mark Milian joked: ‘What if the title is Big Bird?’
‘Tempting’, Dorsey replied, and when someone suggested the job title Technoking, he replied: ‘Taken’.
Another asked more seriously if Dorsey would like the job.
‘Nah. It’s time to roll the dice again,’ he replied.