Elon Musk is being investigated over details of his potential Twitter purchase, with federal regulators saying he was slow to complete a key form in the process, according to the Wall Street Journal.
According to a Wall Street Journal report, the Securities and Exchange Commission is investigating Elon Musk’s failure to timely disclose his massive purchase of Twitter stock last March. As a reminder, the billionaire took too long to file the required public form as he was in the process of buying back 9.2% of Twitter shares and becoming the company’s largest shareholder.
This lag notably enabled him to buy more shares without alerting the other shareholders, and thus to save a significant sum of money in the process. Musk is also the subject of a lawsuit by Twitter shareholders and a separate investigation by the FTC over the same matter.
Because of these new investigations into the transaction, Twitter’s stock has fallen more than 10% since Elon Musk’s first proposal. As of Thursday’s market close, the stock was trading at $45.08; well below the $54.20 Musk agreed to pay on April 27. The difference is more than $9 billion in market value.
Elon Musk pauses Twitter takeover, stock plummets
An investment company had also advised the billionaire to withdraw from the deal and pay the $ 1 billion penalty for breach of contract to be able to make a new, smaller offer that would better correspond to the current value of the business. Although Twitter’s board has already approved the purchase; the deal could take months to close, and there’s no guarantee it will. The investigation will have to determine if Elon Musk’s actions have had a significant impact on other investors. For now, it’s unclear what penalties Musk could face if the SEC decides to take action against him.
Elon Musk himself announced on his personal account earlier today that he had suspended the takeover; thus causing Twitter to lose an additional 25% in pre-market trading. For now, the CEO of Tesla would wait for more details on the volume of fake accounts present on the platform. According to him, accounts spreading spam; and scams represented less than 5% of monetizable daily users, but this figure remains to be proven.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Twitter CEO Parag Agrawal announced a change on new hires and spending cuts overall amid a global economic downturn; and a period of uncertainty leading up to Elon Musk’s acquisition of the social network. In addition, the company lost two top managers unexpectedly for them.
In addition to halting recruitment, according to an internal instruction obtained by Bloomberg through its channels; the company can cancel job offers already made. This does not apply to business-critical positions. In addition, it is planned to save on business trips, consulting services and marketing.