Forbes, a global media company with a focus on business, investment, leadership, and lifestyle broke the news about the Securities and Exchange Commission’s (SEC) investigation into Elon Musk’s delay in disclosing his Twitter (TWTR) stake.
Regulations state that an investor must disclose his stake in a company within ten days of exceeding a 5% limit before buying any additional shares. This warns the other shareholders and management of the company about the possible intent of a controlling influence by an outsider.
As per regulatory filings, Musk’s Twitter stake exceeded the 5% limit on March 14, 2022. This means Musk should have ideally disclosed his stake latest by March 24. Nonetheless, Musk continued to usurp additional shares and disclosed his stake on April 4, by that time his total Twitter stake stood at 9.2%, making him the company’s largest shareholder.
Why Musk failed to disclose the stake on time is still a guess. Some argue that Musk gained from his secret buying spree. Because if he had disclosed the initial 5% stake, the stock price would have rallied, making his future purchases expensive.
Although the SEC cannot stop the Twitter takeover because it has been approved by its Board, the watchdog can penalize Musk for the delay. The billionaire investor and CEO of electric carmaker Tesla (TSLA) has a way of constantly getting into spats with authorities, and this one just added another feather to his cap!