The Securities Exchange Commission got another reason to go after Tesla CEO Elon Musk.
On Monday, the controversial Tesla CEO announced acquiring 9.2% shares in Twitter – causing the social media company stocks to go up by 28% in the afternoon stocks trading.
However, according to the Former securities officials’ statement, Elon Musk “may have missed a key disclosure deadline when he bought 9% of Twitter’. They further said that the SEC officials could use any shortcoming to punish him – more for his prior lapses.
“Did Elon Musk break securities laws again? Former securities officials and professors say Musk may have missed a key disclosure deadline when he bought 9% of Twitter,” Reuters Tweeted.
When Musk revealed that he became the largest shareholder of the micro-blogging site, the company’s shares rose to 27% about the same day. The bold step of the CEO came after he criticized Twitter, saying the social media site is “failing to adhere to free speech principle.”
The Security and Exchange Commission states that ‘anyone who acquires more than 5% of a company’s common shares discloses their holdings within 10 calendar days.” Elon Musk signed his filing almost 21 days following March 14.
They further made it clear that failing in timely reporting could lead to a $207,183 per-violation civil penalty, said the Georgetown University Law Center’s law professor, Urska Velikonja.
The current situation with stocks trading can be summed up as a ‘financial slap’ for the Tesla CEO with a $302 billion net worth. However, the authorities could look into the Twitter stocks related market manipulation allegations and seek more severe sanctions in an already launched probe regarding the CEO’s Tesla stock sales, say the experts.
Another law professor from the University of Michigan Law School said “This is not really a gray area. He acquired it and didn’t file within 10 days. It’s a violation. And so this is a slam dunk case from the SEC perspective.”
On March 25, after the 10-day calendar window, Elon Musk posted a poll on Twitter, saying, “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”