SEC steps up scrutiny over Musk comments on $44 billion Twitter deal

The U.S. SEC asked Musk in a letter whether he should have amended his public filing to reflect his intention to suspend or abandon the deal

July 15, 2022 10:39 am | Updated 10:39 am IST

In this photo illustration, a phone screen displays the Twitter account of Elon Musk with a photo of him shown in the background.

In this photo illustration, a phone screen displays the Twitter account of Elon Musk with a photo of him shown in the background. | Photo Credit: AFP

The U.S. securities regulator quizzed Elon Musk last month over a tweet in which the world's richest person raised doubts over whether he would move ahead with his $44 billion acquisition of Twitter Inc due to concerns over the number of fake users on the platform.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

The U.S. Securities and Exchange Commission (SEC) asked Musk in a letter whether he should have amended his public filing to reflect his intention to suspend or abandon the deal, according to the June 2 letter made public on Thursday.

The agency was referring to his May 17 tweet in which he said the "deal cannot move forward" until Twitter provided more data about how the company handled fake accounts.

The letter shows the SEC has been tracking Musk's statements on the blockbuster deal, increasing pressure on the Tesla Inc boss who has been locked in a feud with the SEC over his tweets about Tesla since 2018. The agency already has several open probes into Musk, according to court filings and media reports.

The SEC said in the letter it had inquired about the May 17 tweet with Musk's legal counsel the following day, but had not received a response more than two weeks later. The SEC added if Musk did not respond, it may decide to release publicly all correspondence, including the letter.

Musk's lawyers said in a June 7 letter that the tweet did not require an amendment because Musk's plans for the deal had not changed at that time.

Musk said on Friday he was terminating the deal because the social media company had breached multiple provisions of the merger agreement, although on Tuesday Twitter sued Musk alleging he had broken the terms of the deal and made misleading statements about its operations.

Securities lawyers said they expected the SEC would scrutinise Musk's public statements on the deal to assess whether he misled the market as to his intentions.

In April, the SEC asked Musk whether the disclosure of his Twitter stake was late and why it indicated that he intended to be a passive shareholder. Musk later refiled the disclosure to indicate he was an active investor.

Top News Today

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.