Billionaire Elon Musk, who is buying Twitter in the name of free speech, allegedly missed a reporting deadline when acquiring stock in the social media platform.
This miscue has reportedly prompted an investigation by the Biden administration’s U.S. Securities and Exchange Commission.
The quirky and visionary Tesla and SpaceX CEO may have violated a significant share-purchase rule in this scenario. On the other hand, there are numerous examples where the left has weaponized the legal system in the form of selective, politicized enforcement.
Under SEC regulations, however, an investor must formally make it known when he or she has purchased more than five percent of the shares of a company.
Musk was apparently 10 days late in compliance.
“Investors who cross that [five percent] line are required to file a form with the SEC revealing their stake within 10 days. Mr. Musk’s holdings topped 5% on March 14, securities filings show, meaning he should have disclosed his stake by March 24 under SEC rules,” the Wall Street Journal explained on Wednesday. “After March 24, Mr. Musk purchased roughly $513 million of stock at prices between $38.20 and $40.31 a share, according to a regulatory filing. The total buying spree made him Twitter’s largest individual shareholder with 9.2% of its shares.”
Musk, said to be the world’s richest man, supposedly saved $140 million-plus pursuant to the late notification, which reportedly occurred on April 4.
‘Since I’ve been asked a lot’: Elon Musk offers stock market advice, gets flooded with questions https://t.co/oNUJ1cGJip
— Jack Furnari (@JackBPR) May 1, 2022
In what is likely some disappointing news for the anti-free speech cohort, which includes Joe Biden’s so-called Ministry of Truth, and most corporate media outlets and their blue-checkers, the WSJ indicated that the sale is still likely to go through, however, according to a University of Pennsylvania law school professor, although time will tell.
“The SEC could drop its investigation without bringing civil claims, as not every probe results in formal action. An SEC lawsuit against Mr. Musk would be unlikely to derail the Twitter deal because the company’s board of directors has endorsed it and the SEC generally lacks the power to stop mergers or take-private transactions…Regulators could seek a court order preventing Mr. Musk from voting shares he acquired without proper disclosure, but the SEC generally hasn’t pursued that remedy…,” the news outlet claimed.
Last month, the SEC and the U.S. Department of Justice reportedly launched an inquiry that also extends to some aspects of Tesla operations.
‘Amazing coincidence!’ SEC and DOJ swoop in to investigate Tesla as Musk mulls Twitter takeover; report https://t.co/vq49c2muSA
— Jack Furnari (@JackBPR) April 15, 2022
Musk obviously has a lot of smart people around him, including lawyers (although it raises a question about where they were when it came time to file the necessary paperwork with the SEC), so it remains to be seen where this investigation will go.
“The disclosure functions as an early sign to shareholders and companies that a significant investor could seek to control or influence a company,” the WSJ noted about the five-percent threshold.
At this writing, Musk — who often posts provocative and/or cryptic messages on Twitter — has not commented.
The Federal Trade Commission is also supposedly looking into whether Musk breached another law regarding activist investing, which, if proven, could result in large civil fines.
Musk says Twitter ‘has a strong left wing bias’ over anti-abortion arson attack, shares what he prefers https://t.co/zcsy8DDLBj
— Jack Furnari (@JackBPR) May 9, 2022
“The probe is not Musk’s first scrape with the SEC. The SEC sued the billionaire in 2018 for allegedly misleading Tesla shareholders with a now-infamous tweet declaring he planned to take Tesla private at $420 per share. Musk would ultimately make a settlement in the case, and he is now required to vet every tweet he publishes regarding Tesla with a lawyer,” Fox Business recalled.
Musk has vowed to unban former President Donald Trump when he officially takes control of Twitter once the $44 billion deal is finalized.
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Robert Jonathan is a staff writer for BizPac Review. He is a longtime writer/editor for news aggregation websites and has also developed content in the legal and financial publishing sectors as well as for online education. He earned a Juris Doctorate from the University of Connecticut School of Law, “a law school the basketball teams can be proud of.”
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