The US Securities and Exchange Commission has scrutinized tech billionaire Elon Musk’s entry as a major investor on Twitter. As early as April 4, the authority asked the Tesla boss for regulatory compliance information when disclosing his involvement in the short message service. This is stated in a letter to Musk released by the SEC on Friday.
In addition, the star entrepreneur faces another lawsuit against shareholders – krone.at reports – for alleged market manipulation and securities fraud. He has not yet responded to the allegations.
Investment not correctly stated?
In the letter, the SEC warns Musk that he may not have properly disclosed his investment on Twitter. Musk announced on April 4 that he owned more than nine percent of the company. In the US, investors are required to report holdings of more than 5 percent within ten days. Musk apparently failed to do so. Twitter shareholders have therefore sued him. They believe that by disobeying the rule, he was able to increase his stake favorably.
Musk and SEC have been at odds for years
Musk has been at odds with the SEC for years. The authority had indicted him in 2018 for misleading tweets. Musk had tweeted, among other things, that he wanted to take Tesla private and that he had secured the financing for it. However, according to the SEC, that was not the truth. By comparison, the Tesla boss agreed to a fine. He also had to temporarily resign from the chairmanship of the board of directors and has since had certain stock-related tweets checked by a lawyer. But Musk then taunted the SEC and happily continued to tweet.
Investor accuses breach of disclosure obligations
It wasn’t until Wednesday that another shareholder lawsuit was filed against Musk for alleged legal violations when he joined Twitter. It also concerns the later agreed takeover of the SMS service by the multi-billionaire. A US shareholder accuses Musk of saving a lot of money at the expense of shareholders by violating information obligations when buying Twitter shares. Other lawsuits involving such allegations against Musk had started as early as April. US law firms are preparing further proceedings.
But the new lawsuit goes beyond allegations that Musk’s Twitter investment failed to meet regulatory reporting deadlines. The plaintiff also accuses Tesla’s CEO of causing Twitter shares to plummet with his comments following the deal. The accusation of ignoring the stock market rules is especially explosive. Musk has passed the SEC deadline by 11 days, according to the latest lawsuit. In doing so, he allegedly paid an artificially low price for Twitter stock, ultimately saving him $156 million.
Major US law firms gather clients
Other prosecutors also accuse Musk of market manipulation and securities fraud for this reason. A number of major US law firms, including Hagens Berman – known for the Dieselgate class action lawsuits against Volkswagen – have been winding up clients for weeks. It’s no longer just a question of whether everything was right when Musk joined Twitter. Because after he agreed on a takeover with Twitter, his statements caused further price turbulence.
Musk strongly criticized the company, then declared the deal shelved because he suspected the proportion of spam and bot accounts was higher than Twitter reported. The stock then lost a lot of value. The latest lawsuit now also blames Musk for the price drop. Twitter cannot unilaterally put the acquisition agreement on hold. The board of directors recently determined to close the deal for the agreed-upon $54.20 per share. A shareholder vote on the offer is still pending.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
