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

Tesla Inc TSLA CEO Elon Musk is facing a federal probe over missing a key deadline last month to disclose a sizable stake in Twitter Inc 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 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