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Elon Musk Said To Face Federal Probe Over Violating Rules In Disclosure Of Twitter Stake

By Rachit Vats

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk is facing a federal probe over missing a key deadline last month to disclose a sizable stake in Twitter Inc (NYSE:TWTR), the microblogging site that he is now buying for $44 billion, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.

What Happened: U.S. Securities and Exchange Commission is probing Musk’s late submission of a key form that informs investors about owning more than 5% shares in a company and could be an early indication to shareholders that a significant investor could seek to control or influence the company.

SEC law requires disclosures to be filed within ten days of buying a stake of over 5%. Musk’s revelation came at least 10 days after his stake surpassed the trigger point for disclosure. SEC filings noted March 14 as the date of the event.

Musk bought $513 million of stock at prices between $38.20 and $40.31 a share after March 24, making him Twitter’s largest individual shareholder with 9.2% of its shares. The world’s richest man likely saved more than $143 million on those trades based on Twitter’s closing price of $49.97 on April 4, the day Musk disclosed his stake.

See Also: Elon Musk Began Buying Twitter Shares In January: How He Built His Stake (Graph)

The billionaire entrepreneur has not “publicly explained” why he didn’t file the disclosures in a timely manner.

Small-time Investors Get A Chance: Potential investors including hedge funds and wealthy individuals have been offered the opportunity to invest $5 million or more in Musk’s Twitter buyout, Bloomberg News reported on Wednesday, citing people with knowledge of the matter. 

The smaller investors are being invited to participate through special-purpose vehicles that will pool capital together from a variety of smaller sources, a move that would allow a well-connected financier to rope in investors who might not have direct access to the deal, the report noted.

The billionaire entrepreneur last week shored up $7.1 billion in new financing from 19 investors including Oracle Corp (NASDAQ:ORCL) founder Larry Ellison to finance his $44 billion take-private deal.

Price Action: Twitter closed 2.5% lower at $46 on Wednesday. Tesla closed 8.25% lower at $734.

Photo: Courtesy of Steve Jurvetson via Flickr

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Dive Deeper:
Tesla, Twitter shares drop as Elon Musk's legal issues grow
Shares of Tesla and Twitter have tumbled this week
Neither Trump Nor Biden, Elon Musk Wants A 2024 Presidential Candidate Who Isn't '8000 Years Old'
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk said President Joe Biden is mistaken in thinking he was elected to “transform the country.”
Musk Says $44 Bln Twitter Deal on Hold over Fake Account Data
Elon Musk tweeted on Friday that his $44-billion cash deal for Twitter Inc was "temporarily on hold” while he waits…
Elon Musk Suggests You Use Chronological Tweets Feature Over Whatever 'The Algorithm' Suggests
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk on Wednesday favored the chronological order of tweets rather than the algorithm-driven option. 
One subscription that gives you access to news from hundreds of sites
Cathie Wood Cuts Twitter Stake By Another $6.4M, Edges Towards Complete Exit
Cathie Wood-led Ark Invest Management on Monday sold most of its remaining stake in Twitter Inc (NYSE: TWTR), just days after Tesla Inc (NASDAQ: TSLA
Elon Musk seeks to scrap Tesla margin loan with new Twitter funding
Elon Musk is in talks to raise enough equity and preferred financing for his proposed buyout of Twitter Inc. to…
Get all your news in one place