SEC opens investigation into Elon Musk’s takeover of Twitter

by MMC
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The United States Securities and Exchange Commission (SEC) has announced the opening of an investigation into Elon Musk’s recent acquisition of social media giant Twitter. The SEC said in a statement that it was investigating whether Musk violated any securities laws or regulations when he announced he purchased Twitter for $50 billion on April 14, 2023.

Business mogul Elon Musk posted his first tweet on his personal Twitter account in June 2010 and had over 80 million followers as of April 2022. In 2017, in response to a tweet suggesting he buy Twitter, Inc., Musk replied: “How much is it?” On March 24, 2022, Musk began tweeting criticism of Twitter, questioning his followers about whether the company adhered to the principle that “free speech is essential to a functioning democracy.”

Musk then made an offer to buy Twitter for $54.20 per share, or about $44 billion, a price well above the company’s stock price at the time. He says his goal is to apply free speech principles to the platform, which he says has been mismanaged. “The business will not thrive and serve this societal imperative in its current form,” he wrote. “Twitter must be transformed into a private company. »

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Musk, founder and CEO of Tesla and SpaceX, surprised the world when he tweeted that he had secured funding to take Twitter private at $54.20 per share, a 40% premium to its closing price from March 30. to make Twitter a more innovative and user-friendly platform, and that he had the support of Twitter’s board of directors and CEO Jack Dorsey. It also said it would allow existing shareholders to keep their shares or sell them at the offered price.

However, the SEC is concerned that Musk may have misled investors or manipulated the market with his announcement, which reportedly sent Twitter shares up 35% in one day. The SEC is also investigating whether Musk actually obtained the financing he claimed and whether he followed proper disclosure procedures for such a large transaction. The SEC subpoenaed Musk, Twitter and several banks and investors involved in the transaction, and asked them to provide documents and information relating to the transaction.

The SEC investigation could have serious consequences for Musk, who has a history of conflicts with the regulator. In 2018, he was sued by the SEC for fraud after tweeting that he had secured financing to take Tesla private at $420 per share, which turned out to be false. He settled the case by agreeing to pay a $20 million fine and resign as chairman of Tesla.

He also agreed to have his public statements regarding Tesla reviewed by an attorney before posting them online. However, in 2019, he was found in contempt of court for violating the settlement agreement by tweeting inaccurate information about Tesla’s production numbers. He avoided further sanctions by agreeing to revised regulations specifying the topics for which he had to be approved before tweeting.

If the SEC finds that Musk violated any securities laws or regulations with his Twitter offering, he could be subject to civil or criminal charges, fines, injunctions or even a ban on trading. exercise the functions of manager or director of a public company. He could also face lawsuits from shareholders or regulators who claim to have suffered losses or damages as a result of his actions.

Musk has not commented on the SEC investigation, but he has continued to tweet about his plans for Twitter. He said he wants to make Twitter a more democratic and decentralized platform, where users can create their own rules and communities. He also said he plans to integrate Twitter with his other businesses, such as Neuralink, Starlink and The Boring Company. It said it hoped to complete the deal by the end of 2023, pending regulatory approval and a shareholder vote.

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