Securities & Exchange Commission Investigate Elon Musk Financials

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The Securities and Exchange Commission (SEC) confirmed it’s investigating the actions of billionaire Elon Musk in connection to his investment in Twitter, which he’s revealed a plan to purchase in the time since initially investing (although the deal actually going through isn’t necessarily certain, it seems).

Referring to an earlier disclosure in relation to earlier investments he made, the SEC “asked [Musk] why he listed his stake as passive while making public statements about the company,” The Washington Post explains. Musk’s claim to have been a passive investor contradicts the ambition he swiftly revealed to take control of the social media platform. (He later updated his status.) The SEC “also asked him why he missed a 10-day deadline for disclosing his investment,” the Post adds.

In March of this year, Musk passed a threshold in the amount of Twitter stock he owned that required him to publicly disclose his investment — but he didn’t file that disclosure until after the 10-day deadline for making it had passed. In the meantime, Musk bought additional Twitter stock, the price of which is broadly believed to have been kept down by Musk keeping his prior investments private. (Revealing the investments would have driven up investors’ interest in the company.)

The SEC made these inquiries to Musk in a letter dated April 4. The Post notes that the probe by the federal agency could lead to a financial penalty for Musk, but the investigation doesn’t appear set to affect Musk’s attempt to obtain control of Twitter. Musk previously paid a $20 million fine in relation to scrutiny by the SEC of a Twitter post in which he falsely claimed he’d accumulated the funding to take Tesla private. Separately, Musk was sued in federal court by a group of Twitter investors this week in relation to his failure to disclose his initial large investments in Twitter by the required point.

As reported here, the lawsuit makes the case that Musk — who acts as though publicly whining on Twitter is his job — manipulated Twitter’s share price to ease the financial impact from the large stock purchases he’s made so far. Specifically, Musk failed to publicly disclose within 10 days — as required by law — that he’d purchased more than 5 percent of the company’s shares, and he subsequently bought more. The lawsuit estimates that Musk’s delayed disclosure of his Twitter stake saved him some $156 million. “By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the lawsuit states. Those behind the new lawsuit also allege Musk’s high-profile criticism towards various elements of Twitter operations has been another effort to force its stock price downward.