SEC scrutinises Musk tweet over $44bn Twitter takeover bid

Elon Musk is facing scrutiny from the US Securities and Exchange Commission over a tweet related to his $44bn takeover bid for Twitter, as the billionaire’s actions come into focus. 

According to regulatory filings, SEC mergers and acquisitions officials sent Musk’s lawyers a letter about a May 17 tweet in which he said that his acquisition of the social media company “cannot move forward”, citing concerns over the number of spam and fake accounts on the platform. 

The SEC asked why the billionaire Tesla chief executive had not formally notified investors of the “apparent material change” to his bid through a regulatory filing that lists his Twitter shareholding — to which his lawyers responded on June 7 they did not believe it was necessary. 

“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,” Mike Ringler, partner at Skadden Arps, Slate, Meagher & Flom, wrote, according to a filing made public on Thursday. 

The news comes days after Musk announced he was trying to pull out of the deal. Twitter then sued the entrepreneur in a bid to force him to complete the transaction.

As part of its complaint filed in Delaware chancery court, the social media platform argued that Musk repeatedly breached the merger agreement, including by violating the non-disparagement clause through several tweets he posted mocking the company and its leadership. 

Musk had attached his termination letter as part of an amended regulatory filing last Friday upon announcing his intentions to pull out of the deal.

Separately, Musk has faced scrutiny from the SEC over his initial purchase of a 9.2 per cent stake in Twitter, before he agreed to buy the platform. In early April, regulators told Musk that it “does not appear” that he disclosed the acquisition of Twitter shares within the 10-day time period required under securities laws, and asked him for more information.

Musk, a prolific Twitter user with 101mn followers, has had a previous run-in with the SEC over his communications on the platform after he wrote that he had “funding secured” to take Tesla private in 2018 — but ​​was later charged with securities fraud for misleading the market. He subsequently settled with the regulator and agreed to have tweets about Tesla approved by a lawyer.