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SEC Questions Musk’s Timing on Twitter Deal

July 15, 2022 by Madeline Hughes
SEC Questions Musk’s Timing on Twitter Deal
Elon Musk, Tesla CEO, attends the opening of the Tesla factory, Berlin-Brandenburg, in Grünheide, Germany, March 22, 2022. (Patrick Pleul/Pool via AP)

WASHINGTON — The U.S. Securities and Exchange Commission began to question Elon Musk about his potential attempt to pull out of his $44 billion deal to buy Twitter more than a month before he made it official.

The questions came after a May tweet in which Musk said his deal to buy the company was “on hold,” according to a letter dated June 2 released by the SEC Thursday. Staff from the commission had a phone call with Musk and his lawyers the day after the tweet, which they then followed up with the letter.

The letter states, “We note that on May 17, 2022, Elon R. Musk referred to the pending acquisition of Twitter, Inc. and publicly stated via his Twitter feed that ‘[t]his deal cannot move forward’. The term ‘cannot’ 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. Yet, we note that the Schedule 13D has not been amended to reflect the apparent material change that has occurred to the facts previously reported under Item 4 of Schedule 13D.”

The SEC asked for Musk to “Provide us with a written analysis in support of any conclusion that an amendment is not required” and also “Include in this analysis a clear statement as to Mr. Musk’s current plans or proposals with respect to the acquisition of Twitter. If a material change has occurred, then promptly amend the Schedule 13D.” 

In a letter filed June 7, Musk’s lawyer, Mike Ringler, said the tweet didn’t amount to him backing out of the deal.

“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,” Ringler wrote.

Since Musk began his attempted takeover there have been questions about his filings. On April 4, the day Musk first disclosed a 9.2% stake in the company, the SEC wrote a letter to Musk asking why he didn’t file his Schedule 13G when he acquired 5% of the company’s stock on March 14.

According to SEC rules, he was required to make that disclosure by March 24 — 10 days after he reached the 5% threshold. The commission publicly posted that letter in May.

Twitter also raised concerns about how Musk purchased the shares in the lawsuit the company filed this week that seeks to hold him to his purchase agreement.

Twitter has asked that an expedited trial take place this September.

Madeline can be reached at maddie@thewellnews.com or on Twitter @ByMaddieHughes

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