Misconduct: Elon Musk may face new problems with the SEC over his entry on Twitter | news

• Musk announced a 9.2% stake in Twitter on April 4
• You missed the disclosure deadline and submitted the wrong form
• SEC may also sue Musk for attempted price manipulation

Tesla boss Elon Musk is a very active user of the microblogging service Twitter and regularly provides his approximately 81 million followers with more or less interesting information there. But tweeting is apparently no longer enough for the billionaire: on April 4, it was announced that Musk had acquired a 9.2% stake in the short message service and was now Twitter’s largest shareholder. Just a day later, it was reported that the Tesla boss would also get a seat on Twitter’s board, giving him the chance to influence the company’s strategy and management. However, on the day of his appointment, according to Twitter boss Parag, Musk announced that he would ultimately not join the board.

Overall, Musk’s Twitter debut didn’t go to plan. The world’s richest man made mistakes that could now call the United States Securities and Exchange Commission to the scene. The agency has launched investigations into Musk in the past, such as when he asked on Twitter last year if he should sell 10% of his Tesla shares. Additionally, some of Musk’s tweets must be vetted by SEC orders before publication by Tesla’s legal department since the billionaire announced on the short message service in 2018 that he wanted to take the electric car maker out of business. the stock market. Musk views this as harassment by the SEC and is now trying to overturn that requirement. Apparently, he hasn’t improved, as recent incidents surrounding his Twitter entry show.

Musk ignores an important deadline when he enters Twitter

SEC filings show Elon Musk bought Twitter stock almost every trading day between Jan. 31 and April 1, 2022, boosting his ownership by just over nine percent. The stake was then disclosed in early April. However, US securities law requires a shareholder to disclose their stake within 10 days of exceeding the 5% hurdle. As the “Reuters” news agency calculated with reference to SEC forms, this threshold was exceeded on March 14. Musk should have registered his involvement by March 24 – but didn’t until more than a week later. “It’s not really a gray area. He has [die Anteile] Purchased and not delivered within ten days. It is a violation. So from the SEC’s perspective, it’s a surefire bet,” Adam C. Pritchard, a law professor at the University of Michigan, told Reuters. If the SEC takes action and punishes this breach, Musk could be liable to a fine of around 207,000 US dollars, as law professor Urska Velikonja told the news agency, given his assets, which according to “Forbes” currently amount to a good US$274 billion (as of April 8, 2022), this is expected to be Twitter’s new major shareholder but hardly hit hard.

Keith Higgins, who served as the SEC’s filing officer under President Barack Obama, told Gulf News that late filings usually don’t trigger an SEC investigation. With Musk, however, things should be different. “It’s not your typical late filing,” said Higgins, who also described the process as “not just a foot mistake.” Because there are other violations when Musk entered Twitter, and he thinks the missed deadline could accelerate SEC actions. Additionally, the U.S. Securities and Exchange Commission, headed by Gary Gensler, wants to shorten the disclosure period for a 5% stake to just five days, according to the news site, to create more transparency. So Musk missed a deadline that the SEC apparently already found too generous – and he allowed himself more mistakes.

Tesla boss initially submits the wrong form

When Musk announced his involvement with Twitter, he first used Form 13G, according to Reuters. However, this is reserved for investors who only hold the shares passively but do not wish to actively participate in the affairs of the company. However, the Tesla boss is becoming an active investor and has already indicated that he wants to make some changes to Twitter, such as introducing an edit button for posted tweets. He should therefore have used Form 13D, intended for active investors. Musk corrected his original submission a day later and submitted Form 13D to change his status to an active investor. However, according to Keith Higgins, this error could become a stumbling block for the SEC to open an investigation. “It’s conceivable that they’re following this,” Higgins told Gulf News.

SEC investigation also possible due to price manipulation

However, an SEC investigation, if launched, could go far beyond these two formal errors. “I suspect the SEC will conduct a long and thorough investigation into whether it can bring tampering charges against Musk, as well as whether or not to do so. [die Formulare] submit,” law professor Urska Velikonja told Reuters. The Tesla boss recently posted several tweets in which he positioned himself critically of Twitter. At that time, however, he was already heavily invested in the messaging service. For example, on March 25, he launched a survey to find out whether Twitter strictly adheres to the principle of free speech and then asked if a new platform was needed.

When asked by a follower if Musk was considering creating a new social media platform that would disclose his algorithm, make free speech a top priority, and keep propaganda to a minimum, the Tesla CEO replied that he was thinking about it “seriously”.

This particular statement could now be fatal for Musk, as he, as a well-known Twitter user with a large number of followers, could influence Twitter’s business with such claims. “His social media post about potential alternatives to Twitter, in light of the previously secret involvement, can be seen as a form of market manipulation aimed at influencing the stock price,” l former SEC adviser Howard Fischer. However, Fischer, who is now a partner at a law firm, said that would be difficult to prove. Whether and to what extent the SEC will – yet again – launch an investigation into Musk remains to be seen.

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