The SEC is investigating Elon Musk for late disclosure of Twitter stake

As per the regulations of the SEC, any investor who crosses the 5 percent threshold of ownership of a company's stock must reveal it through a filing within a period of 10 days. Musk had reached this threshold on March 14, and his declaration should have come out before March 24.

Daniel Taylor, an accounting professor at the University of Pennsylvania, told WSJ that Musk's purchases after March 24 were made when the Twitter stock price was between $38.20 and $40.31 a share. Musk purchased over $500 million worth of stock during this period. However, when Musk's stake in the company was publicized on April 4, the Twitter stock shot up to nearly $50, saving him $143 million in these trades.

Although an SEC investigation is ongoing in this matter, it will not necessarily lead to any formal action being taken. Even if the SEC were to drag Musk to court over this matter, the Twitter deal has been endorsed by the Twitter board, and the SEC does not have the power to stop a merger or, in this case, a take-private transaction, WSJ reported.

Musk's transactions may have violated a law that requires companies to report large transactions to anti-trust enforcement agencies. An investor typically waits for 30 days for the agencies to verify if the purchase hurts competition before making more purchases into the company. As per WSJ, activist purchases over $92 million fall under this category that require a mandatory filing, which Musk did not do. If the FTC finds that Musk has violated the law, it could fine him up to $43,792 a day.

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