- Elon Musk is under investigation by the US SEC and the Federal Trade Commission
- SEC is investigating Musk’s failure to submit the schedule 13D document on time
- FTC Is investigating whether Musk broke the law after failing to report the large sums of money he had transacted
The new owner of Twitter, who is also the CEO of Tesla, Elon Musk, failed to submit his schedule 13D on time and now the United States Securities and Exchange Commission (SEC) is on his neck. An investor who has purchased over 5% of a company’s stock files the filing schedule 13D.
Musk purchased 9.6% of Twitter’s stocks, which accumulated to 73 million shares and filed the document on 4th April. This was 10 days later, which gave him time to purchase more stocks at a lower price than expected.
This delay saved him approximately more than $143 million. Musk should have paid a total sum of $3.32 billion while purchasing the stocks, as each stock was sold at $45.60 as Twitter closed as of Wednesday. Instead, he paid $2.6 billion.
At first, Musk filed Schedule 13G, which should be filed by passive investors, instead of Schedule 13D.
FTC is also following up on Elon Musk
Along with the SEC’s investigation, another investigation on Musk is also ongoing. This time it is the Federal Trade Commission (FTC), which is investigating whether Musk committed an offence by failing to report the large amounts of transactions.
According to the law, investors are required to present transactions that involve huge sums of money to the Antitrust enforcement agencies.
By law, inventors are supposed to wait for 30 days before buying any more shares of a company. The 30 days come after they have reported to the agencies. This 30-day period also buys the overseer time to examine whether the purchase has any negative impact on the firm’s competition.
According to Musk, he decided to conquer Twitter so that he would ensure that freedom of speech is not interfered with. Musk planned to get rid of the bots from Twitter. This decision alarmed many, while some thought of it as an excellent decision.
In fact, Musk attained the backing of large investors, including the popular exchange, Binance.
Musk’s influence in the crypto world
Musk has been tweeting about cryptocurrencies and some of his tweets seemed to favour the prices of some cryptocurrencies. For example, Dogecoin has benefited from his crypto tweet endorsements.
Musk is also accused by a fellow Twitter shareholder, Marc Bain Rasella. In mid-April, during a lawsuit, Rasella claimed that Musk had lowered the prices of the shares intentionally.
He claimed, “Investors who sold shares in Twitter stock between March 24, 2022 … missed the resulting share price increase as the market reacted to Musk’s purchases and were thereby damaged.”
In the past, the SEC was rarely heard of punishing investors who delay disclosing their over 5% share purchases. However, Gary Gensler, chairperson of SEC, has been making sure that enforcement is met.
Investigations may or may not hold off Musk’s acquisition of Twitter.
