The SEC Calls Elon Musk’s Purchase Of Twitter Into Serious Question, Here’s Why
The SEC has launched a formal inquiry relating to Elon Musk's actions and intentions leading up to his purchase of Twitter.
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It seems as though ever since Elon Musk officially announced his purchase of Twitter every possible caveat that could have arisen out of it has. Everything from poison pill maneuvers to the filing of a formal class-action lawsuit by Twitter’s shareholders has stood or is standing in the way of Elon Musk’s $44 billion acquisition of the social media platform. Now, yet another thing may be standing in the billionaire’s way. The New York Times reported that the Securities and Exchange Commission (SEC) has launched a formal inquiry into whether or not Musk was adequately transparent about his acquisition intentions after acquiring swaths of Twitter shares leading up to his official purchase offer of the platform.
The actions that Musk took that are being called into question by the SEC occurred just prior to when he revealed his intent to buy the social media platform on April 4, 2022. During the latter half of March, Elon Musk had begun buying up significant portions of Twitter stock. Initially, although he had in the past been quite vocal about his dissatisfactions with Twitter, he said that he had no plan to actually try and acquire the social media giant. However, it was not long before Musk became the company’s largest shareholder with a stake in the company that equaled over 9%. Then, just a mere 10 days after becoming the largest shareholder, Musk had suddenly disclosed that he changed his mind and that he did in fact want to purchase the company. Given how convenient the situation seems and how quickly it transpired is what prompted the SEC to take a closer look.
Specifically, the SEC is looking at whether Elon Musk was intentionally misleading. Planning to buy a company and not properly disclosing it is an act that is considered to be fraudulent. Also, given the amount of wealth and businesses Musk has amassed, the situation also calls into question various potential anti-trust violations. Should the SEC be successful in the pursuit of these conclusions they could come with some serious repercussions for Musk, including some substantial fines. Still, since much of the SEC’s inquiry into Musk’s actual intentions are relying on hearsay and circumstantial evidence it seems doubtful that the agency will actually be able to pin him with any violations.
Ironically, this is not the first time that Elon Musk has found himself in an entanglement with the SEC. In 2018 the watchdog organization charged him with securities fraud for making false claims about taking Tesla private, and that he had already secured the capital to do so. Even more ironically, he boasted about his untruthful intentions on none other than Twitter. The SEC was able to disprove his bold claim by confirming that Musk had not secured any capital for the purpose of taking Tesla private. At this time both Elon Musk and his legal counsel have declined to comment on the SEC’s ongoing investigation regarding Musk’s actions relating to his acquisition of the social media behemoth. However, when the results of the investigation are revealed it will certainly be interesting to see the outcome.
