Elon Musk He is facing an investigation into the details of his acquisition of a large stake in TwitterOn Wednesday, the Wall Street Journal reported that federal regulators said it had delayed introducing a key model in the process.
Securities and Exchange Commission (SEC) regulations require shareholders to publicly disclose when they reach a 5% ownership interest in the company. Musk did, but only on April 4, 10 days after his share met disclosure requirements, According to WSJ.
The SEC rule is supposed to allow existing shareholders to receive a warning that the company could face a buyout attempt, and delays in the case of a holder being allowed to buy additional stock without providing that warning, according to the WSJ.
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Musk’s April 4 disclosure revealed that he crossed the 5% threshold on March 14, meaning he was obligated to disclose the purchase by March 24. He didn’t, and subsequent stock purchases on Twitter after March 24 brought him to an ownership stake of 9.2%. Announced on 4th April.
He bought the extra 4.2% at between $38.20 and $40.31 per share, a price that was likely much lower than it would have been if he had disclosed his 5% stake in time. Since Twitter’s stock price soared to $49.97 on the day Musk eventually disclosed his purchase, it likely saved nearly $145 million with the late disclosure, University of Pennsylvania accounting professor Daniel Taylor told WSJ.
Security Law Experts sound the alarm That Musk’s move could lead to another fight with the Securities and Exchange Commission days after he disclosed in April.
“It’s baffling,” Mark Steinberg, a law professor at Southern Methodist University School of Law, told FOX Business at the time. “He obviously has very good legal counsel, especially in terms of filing a form with the Securities and Exchange Commission and when to file it.”
The probe is not the first scratch of a holder with the Securities and Exchange Commission. Supreme Education Council Filed a lawsuit against the billionaire in 2018 Allegedly misleading Tesla shareholders with an infamous tweet announcing that he plans to take over Tesla at $420 per share.
Musk will eventually settle the case, and is now required to check every tweet he posts regarding Tesla with a lawyer.
Megan Heaney of FOX Business contributed to this report.
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