The US Securities and Exchange Commission (SEC) in April began looking into whether billionaire entrepreneur Elon Musk properly timed the disclosure of his stake and business intentions with Twitter, according to a letter released by the SEC on Friday
WASHINGTON (Pakistan Point News / Sputnik - 27th May, 2022) The US Securities and Exchange Commission (SEC) in April began looking into whether billionaire entrepreneur Elon Musk properly timed the disclosure of his stake and business intentions with Twitter, according to a letter released by the SEC on Friday.
The SEC asked Musk in the letter for additional information so that the agency could "better understand (Musk's) disclosure."
Musk on April 4 announced that he acquired a 9.2% stake in Twitter, becoming the company's largest shareholder as a result. Musk then offered to buy all of Twitter's shares ten days later in a deal valued at roughly $44 billion. Twitter accepted the offer, which is expected to be finalized in the coming months.
However, US law requires shareholders who purchase more than 5% of a company's shares to disclose their ownership within 10 days. The SEC in the letter to Musk inquired about the timing of his disclosure, given that Musk said he crossed the share threshold on March 14 but did not make the purchase public until April 4.
The SEC also asked Musk about filing as a passive investor amid public statements on Twitter's free speech policies. Filing as a passive investor despite intending to take control of a company can be considered fraudulent.
The letter's release comes following the filing of a class action lawsuit against Musk by Twitter shareholders, who accuse the entrepreneur of breaching California corporate law by casting doubt on his intent to complete his acquisition of Twitter after signing an agreement, according to US media reports on Friday.
In mid-May, Musk announced a suspension of the purchase due to concerns about the number of spam and fake accounts on Twitter.
The lawsuit alleges that Musk's statements were designed to create doubt about the deal and drive Twitter's stock down substantially in order to create leverage to either back out of the purchase or to re-negotiate the buyout price.�