The Securities and Exchange Commission is investigating Elon Musk’s Twitter disclosures

The US Securities and Exchange Commission confirmed Friday that it is investigating Elon Musk’s disclosure in early April of an ownership stake in Twitter, which came before he agreed to take over the company.

News leadership: The issue at hand is why Musk apparently disclosed his 9.2% position to Twitter after he was legally required to do so, and whether that disclosure is still false.

• timing: Those who buy 5% or more of a publicly traded company must legally disclose that ownership within 10 days of acquisition. However, Musk says he hit the threshold on March 14, but didn’t reveal it until 21 days later on April 4.
• Model Type: The SEC also wants to know why Musk is introducing the “13G” form, which is intended for passive investors, rather than the “13D” form that would be for active investors (including those interested in making a takeover bid).

It is important to note that That the SEC letter came on the same day as Musk’s disclosure, that is, before he offered to buy Twitter directly.

background: Musk and the Securities and Exchange Commission have argued before, over his false claim about “getting secured financing” to take Tesla private, but this has mostly resulted in a slap on the wrist, which Musk continues to ache for.

• If the Securities and Exchange Commission finds that Musk again violated the law related to his Twitter disclosure, it may seek harsher penalties.

Other developments: Musk revealed this week that he plans to offer all the $33.5 billion of shares he committed in the deal, allowing the cancellation of a $12.5 billion marginal loan (which boosted Tesla stock). There is no information yet on whether he has secured additional investment partners, although talks appear to be ongoing with Jack Dorsey and others.

• Speaking of Dorsey, he left Twitter’s board of directors on Wednesday, after the company’s annual shareholder meeting. This was to be expected, because he signaled those intentions when stepping down as CEO last fall.
• Fellow director Egon Durban, a partner at private equity firm Silver Lake, resigned from Twitter’s board of directors on Wednesday after shareholders voted against his candidacy. But Twitter’s board said on Friday it had decided not to accept Durban’s resignation.

Final numbers: Twitter stock opened trading Friday at $39.57 a share, a 27% discount to Musk’s acquisition price.