A letter sent by the SEC to Musk on June 2 includes questions about the billionaire’s use of Twitter (TWTR) to discuss the deal, including his tweets about the deal being paused, according to a Thursday regulatory filing. The agency previously questioned Musk in an April letter about his apparent delay in disclosing his large ownership stake in Twitter.
On May 13, Musk tweeted that the Twitter deal was “temporarily on hold” pending the receipt of information from Twitter about how it calculates the number of bot accounts on its platform. Four days later, he tweeted again that the acquisition “cannot move forward” unless he received more information related to the prevalence of bots, and accused the social media platform of falsifying spam account numbers in its public filings.
In its letter, the SEC said the word “cannot” in the latter tweet “suggests that Mr. Musk and his affiliates are exercising a legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition.” However, it notes, Musk’s regulatory filing related to the deal was not “amended to reflect the apparent material change” immediately following the tweet. The agency asked for an explanation as to why the filing was not updated, as well as “a clear statement as to Mr. Musk’s current plans or proposals with respect to the acquisition of Twitter.”
In a response to the agency dated June 7, Musk’s lawyer wrote that Musk “does not believe” that the tweet required an update to the filing.
“Despite Mr. Musk’s desire to obtain information to evaluate the potential spam and fake accounts, there was no material change to Mr. Musk’s plans and proposals regarding the proposed transaction at such time,” Musk’s response letter states.
News of the latest SEC communication comes after Musk on Friday moved to terminate the deal to acquire Twitter, accusing the company of violating the agreement by failing to share sufficient data about bot accounts. On Tuesday, Twitter filed a lawsuit alleging that Musk is the one in breach of the deal and asking a court to force him to follow through with the acquisition.
It’s unclear whether the SEC’s inquiries would have any bearing on the litigation, but they do add to the Tesla CEO’s rocky history with the agency. In 2018, Musk tweeted that he was “considering taking Tesla private at $420” and that he had “funding secured,” sparking a frenzy and sending shares in the automaker up to $371 from $342. The SEC later said the funding had, in fact, not been secured and sued Musk for misleading investors. Musk eventually settled with the SEC for $20 million and gave up his position as chairman of Tesla.
Musk tried to fight a provision of that settlement that requires him to have certain tweets about Tesla (TSLA) reviewed by lawyers before posting them — and has made a number of disparaging comments about the agency. A judge earlier this year refused to strike down the settlement, saying in his ruling that none of Musk’s “arguments hold water.”
July 15, 2022 at 12:54AM