Elon Musk faces new fight with SEC for late reporting on Twitter shares

Elon Musk may have chosen another war with the Securities and Exchange Commission, setting up a potential conflict over how he revealed his investment on Twitter.

Tesla CEO reveals acquisition of 9.2% stake in Twitter on Monday – making him its largest shareholder – in an SEC Form Investors are required to file when they hold more than 5% in a company. The March 14 filing revealed that Musk had bought about 73.5 million shares for about $ 2.9 billion.

But security legal experts say it came several days later than it should have been, because the SEC requires shareholders of more than 5% of a company to disclose their shares within 10 calendar days.

Musk apparently waited 21 days after March 14 to file the form. Musk’s spokesman did not immediately respond to a request for comment.

On Tuesday, March 22, 2022, Tesla CEO Elon Musk attends the opening ceremony of the Brandenburg Tesla plant in Berlin, Germany. (Patrick Pleul / Pool via AP / AP Newsroom)

“It’s staggering,” Mark Steinberg, a law professor at the Southern Methodist University School of Law, told Fox Business. “He obviously has the best legal team, especially when filing a form in the SEC and when to file it.”

Elon Musk bought the shares on Twitter

On top of that, Musk filed a document with the SEC – Form 13G – stating that he plans to be a passive investor and that he does not want to take a large stake in the company. Those forms should include a certificate that the shareholder has not purchased shares to influence or control the company. Musk did not include that statement in his form; “Not applicable,” he wrote.

Tuesday’s announcement on Tuesday that Musk would join the board of directors after “conversations in recent weeks” will further complicate matters. Musk noted that he hopes to make “significant improvements” in the company in the coming months; His term ends in 2024.

Shareholders wishing to hold a board position or change company are usually required to file a long, in-depth form called 13D within 10 days of purchasing at least 5% of the shares.

“[Musk] What is recommended for a director is not a passive investor, “said Steinberg, a former SEC enforcement lawyer.” , That person is not a passive investor. ”

“Trolling the SEC is one of his favorite things we know from Elon. My guess is that he may have been deliberately vague.”

According to Michael Tambra, an associate professor of accounting and law at the University of Buffalo, SEC Musk is likely to inquire as to when he reached the 5% stake in which shareholders are required to report their shares.

If the SEC decides that Musk violated the disclosure rule, he could face a financial penalty, which is historically very small, about $ 100,000. According to the Bloomberg Billionaire Index, with a net worth of $ 288 billion, Musk, the world’s richest man, has a fine of about Rs.

“Trolling the SEC is one of his favorite things from Elon,” he said. “My guess is that he may be deliberately vague.”

US Securities and Exchange Commission logo hangs on wall at SEC headquarters (Reuters / Jonathan Ernst / Reuters photos)

Dambra said he expects the SEC to be interested in Muskin’s intention of investing 9.2%. It is not clear what Muskin intended for the purchase or board seat.

In recent months, the founder of SpaceX has launched a campaign targeting Twitter, accusing it of restricting freedom of speech. In a tweet on Tuesday, Musk hopes to make “significant improvements” on Twitter in the coming months after being named to the company’s board of directors, which expires in 2024.

“In the end what’s interesting here, what are its consequences?” Tambra said. “Historically, as you can see, revelation sentences are usually small, about $ 100,000. They are very small. Is this important for his troll ability against Elon? Maybe not.”

This will not be Musk’s first run-in with SEC.

In September 2018, after he abruptly tweeted in August that the SEC was “misleading and misleading” investors, he accused Tesla of taking $ 420 a share privately and having already received funding (Tesla shares soared more than 10% in the initial tweet). The deal Musk mentioned was never fulfilled.

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Both Musk and Tesla eventually agreed to a settlement with the government that would impose a $ 20 million fine on the SEC. Musk also had to step down as chairman of the company’s board, while Tesla was forced to oversee Musk’s online communications.

Last month, Musk asked a federal judge to rescind the settlement he reached, arguing that the SEC was abusing its social media policy to continue to investigate its statements. The SEC has denied the allegation.

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