Elon Musk has faced questions from the US Securities and Exchange Commission about how and when he disclosed his large stake in Twitter last month, prior to agreeing to buy the social media company.
On April 4, the same day that Musk initially revealed he had bought up a more than 9% stake in Twitter (TWTR) and become the company’s largest shareholder, the SEC sent him a letter asking why he appeared to have delayed disclosing his stake in an apparent violation of securities law. In its letter to Musk, which emerged Friday, the SEC asked him to “please advise why the [initial disclosure] does not appear to have been made within the required 10 days” from the date on which he acquired a stake in the company greater than 5%.
Musk’s Twitter stake topped 5% on March 14, according to a filing, in which case the public disclosure of that stake should have been made by March 24. Instead, Musk waited 21 days — and continued to amass shares in the company at an effective discount from what the stock would have traded at had such an announcement been made. Musk’s delayed disclosure saved the billionaire around $143 million by keeping the share price lower than it might have been as he continued to buy shares, Daniel Taylor, a University of Pennsylvania accounting professor, has estimated.