The US financial watchdog has stepped up the pressure on Elon Musk over his attempt to buy Twitter by asking further questions about his filings during the process.
The Securities and Exchange Commission (SEC) asked Musk why he did not amend a filing related to the deal in a letter sent last month, according to correspondence disclosed by lawyers representing the Tesla CEO on Thursday. The disclosure by Musk’s lawyers also reveals that the SEC has asked the entrepreneur to file any material aimed at influencing shareholders properly, after pointing out an issue with one such filing.
According to Musk’s lawyers, the SEC asked in a letter dated 2 June why Musk did not update a relevant filing – known as a schedule 13D – when he tweeted on 17 May that the “deal cannot move forward”. Musk, who owns 9.2% of Twitter, is required to update the 13D if the purpose of his shareholding changes – in this case from seeking to buy the company to potentially not doing so.
The SEC goes on to ask for a written explanation as to why the 13D was not amended followed by a “clear statement” about Musk’s plans for buying Twitter.
The correspondence from Musk’s lawyers, which is addressed to the SEC and is dated 7 June, states that the 13D had been updated multiple times already and “continues to reflect Mr Musk’s current plans and proposals with respect to the pending acquisition”.
The correspondence predates Musk’s announcement last week he was seeking to terminate the acquisition agreement, a move that Twitter is now challenging in court.
John Coffee, a professor of law at Columbia University, said Musk should have updated the 13D. He said: “That is clearly a material development and those who file 13Ds are under an obligation to update them.”
The SEC has already been in touch with Musk about Twitter, having contacted him in April about about the disclosure of his stake in the platform and why he appeared to file a crucial form about it late.
Musk has had run-ins with the SEC in the past. In 2018, Musk reached a settlement with the agency over a tweet in which he said he had “funding secured” for a proposal to take Tesla off the stock market.
July 15, 2022 at 12:23AM Dan Milmo in London