Key facts
- Elon Musk purchased more than 9% of Twitter stock last March but disclosed it after the SEC deadline.
- Musk later purchased all of Twitter for $44 billion.
- The Securities & Exchange Commission is investigating the early stock purchase and claims it’s part of a bigger investigation into Musk’s acquisition of the social media platform.
We passed the one-year anniversary of Elon Musk’s purchase of Twitter in late October, and the controversy swirling around that $44 billion transaction shows no sign of abating. The latest development is a clash with the SEC over Musk’s stock purchasing prior to the acquisition and his disclosures and filings related to it.
Here’s a quick look at where we are and how we got here, in case the best U.S. betting sites offer prop bets involving this situation.
A Quick Timeline
Since the day Musk walked into corporate headquarters toting a kitchen sink, his vision and tactics have been questioned by observers as he set about taking the social media platform in a new direction.
Within days of finalizing the sale, he laid off more than half of Twitter’s employees, setting off a frenzy of bad press and causing many to prepare for the demise of one of the leading companies in the social media space.
Twitter is still around, but Musk has made sure to put his brand on it. One of his first acts was to loosen the site’s restrictions on hate speech, as well as rescinding the bans of several members who had run afoul of those restrictions, including former president Donald Trump.
Since then, the site has been called out for racist and white supremacist posts that were not blocked or removed. Since the start of the Israeli war in Gaza, Twitter has seen several major companies cease their ads out of concern over hate speech on the platform.
Musk also made the unpopular move of charging $7.99 a month for users to get a blue “verified” checkmark, which formerly had been awarded based on review of a member’s credentials. He also rebranded the site, scrapping the name Twitter, the company’s bird logo and the terms tweet and retweet, which had become part of everyday conversation. Instead, it is now known simply as X.
The SEC gets involved
For the past six months, the SEC has tried to get Musk to testify as it investigates his Twitter purchase. Specifically, the SEC is looking into potential charges that Musk broke federal securities law in March 2022, when he began purchasing Twitter stock.
That month, Musk purchased a 9.2% share in the company, which made him the majority shareholder in Twitter. He was required to disclose this purchase, which he did, but the SEC claims that he filed the required paperwork too late. Musk made the SEC disclosure filing on April 4, 2022, which was 11 days after the SEC’s deadline for disclosing the transaction. Shareholders filed suit at the time, but the case was dismissed.
However, the SEC believes that the late filing was just the tip of the iceberg, which is why it is investigating so thoroughly. In a filing, the government said its “investigation pertains to considerably more than the timing and substance of a particular SEC filing; it also relates to all of Musk’s purchases of Twitter stock in 2022 and his 2022 statements and SEC filings.”
The SEC said it is investigating whether or not “Musk violated various provisions of the federal securities laws.”
Musk’s Day in Court
Musk had a video conference with the SEC last July and provided documents related to the investigation at that time. Attorneys for the SEC had follow-up questions after reviewing the documents and reached out to try to get Musk to speak with them again.
The SEC claims it subpoenaed Musk to give testimony in the investigation in May of 2023. Musk’s legal team claims the SEC has subpoenaed him at least eight times, five to request more documents and three for additional testimony.
They claim the government is “devoting its formidable resources to investigating Mr. Musk over an allegedly untimely filing,” the court filings said. “This is just the latest chapter in a more-than-five-year saga of agency harassment against Mr. Musk and related entities.”
The SEC subpoenaed Musk in May asking him to testify. He initially agreed to come to the SEC’s San Francisco offices in September for an interview, but two days before the scheduled appearance, he notified that he wouldn’t attend.
The SEC responded by filing suit in October in the hopes of compelling him to testify. In its filing, the SEC said that Musk raised “several spurious objections” to justify his cancellation. Musk’s team charged that their investigation is misguided and said, “The SEC’s pursuit of Mr. Musk has crossed the line into harassment”.
What’s Next?
A federal judge will rule on the SEC’s suit at some point, and it’s likely Musk will again meet with investigators at some point, likely in 2024. It’s still not clear exactly what type of charges the SEC is planning above the late filing issue from last March’s stock purchase. So it appears that X will continue to be battered by the whirlwind of controversy surrounding its new owner.
