Elon Musk faced questions from the SEC about his timing for disclosing his stake on Twitter
In his letter to Musk, which emerged on Friday, the SEC asked him to “please indicate why the [initial disclosure] does not appear to have been made within the required 10 days” from the date on which he acquired a stake in the company greater than 5%.
Musk’s Twitter stake topped 5% on March 14, according to a filing, in which case public disclosure of that stake should have been made by March 24. Instead, Musk waited 21 days – and continued to amass stock in the company at an effective rate. discount to what the stock would have traded at had such an announcement been made.
Musk’s late disclosure saved the billionaire about $143 million by keeping the stock price lower than it could have been as he continued to buy shares, Daniel Taylor estimated. professor of accounting at the University of Pennsylvania.
The SEC also questioned why Musk originally filed a disclosure aimed at passive investors who don’t plan to use their influence to make changes in a company. Musk had previously made several comments on Twitter suggesting he felt changes needed to be made to the platform.
“Your response should address, among other things, your recent public statements on the Twitter platform regarding Twitter…including statements asking whether Twitter (the issuer) strictly adheres to ‘free speech principles,'” the SEC said in its letter.
Musk and the SEC did not immediately respond to requests for comment. Twitter declined to comment.