The US Securities and Exchanges Commission (SEC) has cast doubts over the legality of Elon Musk’s failure to properly disclose his acquisition of a 9.2 per cent stake in Twitter for $2.6bn, before launching his bid to takeover the social media firm.
In an April 4 letter to the richest person in the world – published by the SEC on Friday – the US financial watchdog called on Musk to explain his failure to disclose his mid-March acquisition within the required 10-day period.
The regulator also asked Musk to explain why he had filed the form required for passive investors, instead of active investors, in light of his “recent public statements” as to whether Twitter “’rigorously adheres to’ ‘free speech’”.
The SEC’s letter comes after Musk struck a $44bn deal in April to take control of Twitter, after the billionaire spoke out against the social media platform’s approach to free speech.
More recently, Musk has sought a discount on the $44bn deal he originally negotiated with Twitter after raising concerns around the prevalence of “bots” on the social platform. The billionaire previously called for evidence that fewer than 5 per cent of Twitter users are bots for the deal to go ahead.
The publication of the SEC’s April 4 letter comes after Twitter investors yesterday filed a lawsuit against Musk claiming the billionaire had engaged in “market manipulation” by driving the price of Twitter’s stock down, in order to improve his bargaining position in negotiations with the firm.
Yesterday, Twitter also said it would not accept Musk ally Egon Durban’s resignation from Twitter’s board, after shareholders blocked his re-election at the firm’s annual meeting. Silver Lake Partners, the private equity firm at which Duban is co-CEO, previously helped Musk formulate his $44bn deal.
The vote to oust Dubran came amid concerns the private equity boss had spread himself too thin, by sitting on seven different company boards. However, Twitter said it would keep him on as an exec, following an agreement to see him cut his board membership to five separate positions.