US regulators are launching investigations into Elon Musks purchase of
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US regulators are launching investigations into Elon Musk’s purchase of Twitter’s first stake

Elon Musk is known to have reported his purchase of a large stake in Twitter to US federal authorities with a 10-day delay from the regulatory deadline. This allowed him to continue buying the company’s shares at a lower price than after the announcement that it had breached the 5% threshold. Now the supervisory authorities want to investigate and, if necessary, bring the billionaire to justice.

    Image source: Tesla

Image source: Tesla

The publication reported the launch of an investigation into this incident The Wall Street Journal. The law requires investors to notify US regulators if they buy blocks of stock that exceed 5% of a company’s capital. It was only on April 4 that the Tesla boss informed the relevant authorities about his purchase of Twitter shares, even though his share in the company’s capital had exceeded the five percent mark ten days earlier. According to experts, such a delay could save Musk up to $143 million, since the disclosure of information about his intentions immediately sent Twitter’s share price skyrocketing, and he previously reserved the opportunity to hold the remaining shares until reaching to buy a stake of 9.2% at a lower price.

Musk was required by law to report that his Twitter share exceeded 5 percent by March 24, 10 days after actually hitting the milestone. After March 24, he managed to spend $513 million to buy Twitter shares at prices ranging from $38.2 to $40.31 per share. On April 4, when Musk showed his cards, Twitter’s share price rose to $49.97.

The US Federal Trade Commission investigation is unlikely to affect the deal between Twitter and Elon Musk, but could result in a $43,792 fine for each day of delay. In the case of Musk and his purchase of Twitter stock, that amount needs to be multiplied by ten to estimate the likely size of the fine. In any case, by delaying the explanation of his actions, the billionaire saved far more than he risks losing. Regulators are also trying to determine whether Elon Musk’s actions violated antitrust laws, which require all transactions exceeding $92 million to be approved by the relevant authorities.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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