The SEC wants to know why Musk didn’t file his Twitter shareholding documents when he purchased nearly 10% of it. As it’s the norm with the agency, anyone who owns over 5% of the shares of any company must file the documents of such holdings with the regulator immediately.
On the other hand, the FTC is investigating Musk over a separate policy violation. According to the FTC, anyone involved in such a huge volume of stock acquisition must report it to antitrust-enforcement agencies. Then, such an investor must wait for at least one month before increasing his holdings of that same stock.
The FTC further disclosed that the waiting period would enable the regulator to determine whether the additional purchase would negatively impact the competition.
Has Elon Musk Violated The Law?
A special report by the wall street journal claims that “the SEC’s stance is right for disclosure purposes. Through such disclosure, the public will know whether such investor is attempting a forceful takeover of the company.”
The world was shocked when Musk completed his takeover of the popular social platform, citing the need to “protect free speech.”
While a few were worried that Musk would make Twitter private and ban Twitter bots as he promised before completing the takeover, a few others were happy about the takeover, stating that Musk would truly uphold his ‘freedom of speech’ desire.
As one of the biggest influencers on Twitter, Musk’s opinions (especially about the crypto market) often hugely affect the prices of digital currencies.
Musk has shared various tweets to promote his beloved crypto, dogecoin. Hence, some crypto analysts opine that a Musk-owned Twitter would have an enormous positive impact on the dog-themed crypto and the general crypto market.
Not The First Time
This SEC investigation is the latest run-in among several others that Musk has had with the financial regulator. Four years ago, the SEC forced Musk to pay a settlement fee over comments he made on the bird app. Also, Musk’s tweets and comments outside twitter showed that he has never been a fan of the SEC.
Since the acquisition process is nearly over, it is unlikely that any actions by the SEC or the FTC will likely stop Musk’s Twitter takeover. Nevertheless, the SEC and FTC will continue their investigations into the purchase, and their submissions will likely elicit various reactions from industry and non-industry participants.
However, Aron Solomon, a top legal counsel with esquire digital (a top digital marketing firm for law companies), has opined that no matter the outcome of the investigations by the regulators, Musk’s Twitter takeover can’t be reversed. Solomon added that any negative action by the SEC or FTC would also backfire on the shareholders and not Musk alone. Hence, the shareholders will be the biggest loser.
James Thompson