Elon Musk Investigated by SEC for Delay in Disclosing Twitter (TWTR) Stake

May 12, 2022 6:27 AM EDT

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

U.S. regulators opened an investigation into Elon Musk’s tardy disclosure of his substantial stake in Twitter (NYSE: TWTR) last month as the delay allowed Tesla (NASDAQ: TSLA) CEO to purchase additional shares of the social media company without informing other shareholders about his stake, according to the Wall Street Journal.

The WSJ reported that the Securities and Exchange Commission (SEC) is investigating Musk’s belated filing of a public form that investors are required to send when purchasing a stake in a company larger than 5%.

The report says that Musk disclosed his stake on April 4, at least 10 days after his purchase surpassed the trigger point for submission. Tesla’s boss did not say why he did not declare his stake in due time.

Dr. Daniel Taylor, an accounting professor at the University of Pennsylvania, said Musk saved over $143 million by not declaring that his stake increased above the 5% level as the share price could have surged higher if the market was informed about his stake growing stake.

Investors who increase their stake in a company beyond 5% are required to file a form with the SEC revealing their new stake size within 10 days. In this case, Musk was required to disclose his stake by March 24 as his ownership in Twitter topped 5% on March 14.

“The case is easy. It’s straightforward. But whether they’re going to pick that battle with Elon is another question,” said Dr. Taylor.

Twitter stock price fell another 2% in pre-market Thursday to trade at $45.15 as of 06:25 EST.

By Senad Karaahmetovic

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Hot List, Litigation, Trader Talk

Related Entities

Twitter, Tesla, Senad Karaahmetovic