Elon Musk queried by US SEC over Twitter deal tweet

US regulator Securities and Exchange Commission has asked the tech billionaire why he did not update a disclosure filing after a tweet suggesting his $US44bn bid was in jeopardy.

Tech billionaire Elon Musk’s withdrawal of an unsolicited Twitter takeover bid is in court but is also triggering regulatory questions. Picture: Maja Hitij/Getty Images

Elon Musk is facing scrutiny from securities regulators over whether he promptly disclosed his intention to terminate his $US44bn deal to buy Twitter Inc.

The Securities and Exchange Commission on Thursday (US time) published a letter, dated June 2, it sent to Mr Musk asking why he did not update a disclosure filing over an earlier tweet suggesting the deal was in jeopardy.

In the tweet in question, published on May 17, Mr. Musk stated that the deal “cannot move forward” until the company is clearer about how many of its accounts are fake.

The tweet came weeks before Mr Musk last Friday, in a filing from his lawyer, said he would seek to abandon the deal.

The SEC’s questions concern what is known as a Schedule 13D filing, which investors are required to file when they build a stake of more than 5 per cent in a company.

Investors must file updates to reflect any material change in previously filed information.

The SEC earlier was looking into Mr Musk’s late disclosure of his sizeable stake in Twitter, The Wall Street Journal has reported.

The SEC staff said in the June 2 letter that if a material change to Mr Musk’s plans to buy Twitter had occurred, then he should amend his Schedule 13D to reflect those changes.

The SEC staff also sought clarity on a matter regarding Mr Musk’s May 17 filing in which he disclosed his tweet from the same day.

The June 2 letter was a follow-up to a May 18 phone call between SEC staff and Mr Musk’s legal counsel, it says.

The letter notes that the SEC’s questions from the May 18 call had not yet been answered.

“If you do not respond, we will, consistent with our obligations under the federal securities laws, decide how we will seek to resolve material outstanding comments and complete our review of your filing and your disclosure,” the letter reads.

The agency added that it may decide to publicly release all correspondence relating to the review of Mr Musk’s filing.

Representatives for Mr Musk didn’t return a request for comment.

Mr Musk’s attorney, Mike Ringler, responded to the SEC letter on June 7, a separate regulatory filing shows.

In his response, Mr Ringler said that Mr Musk believes his May 17 tweet cited by the SEC didn’t trigger any required amendment to his Schedule 13D filing.

“Despite Mr Musk’s desire to obtain information to evaluate the potential spam and fake accounts, there was no material change to Mr Musk’s plans and proposals regarding the proposed transaction at such time,” Mr Ringler wrote.

“The Schedule 13D, as amended, continues to reflect Mr Musk’s current plans and proposals with respect to the pending acquisition,” he added in the June 7 letter.

Mr Musk most recently amended his Schedule 13D filing on July 8 to reflect his letter to Twitter of the same day seeking to terminate the merger agreement.

It is the second such letter from the SEC to Mr Musk requesting more information about his public disclosures since he first began accumulating a stake in Twitter.

In May, the SEC published a letter sent to Mr Musk, dated April 4, asking why he didn’t notify the market that he had bought 5 per cent of Twitter within 10 days of crossing the 5 per cent threshold, as required.

Mr Musk’s holdings topped 5 per cent on March 14, securities filings show, and he announced the size of his stake in a filing April 4, by which time it topped 9 per cent.

Mr Musk hasn’t publicly explained why he didn’t file in a timely manner.

In April, Mr Musk agreed to buy Twitter for $US44bn.

Mr Musk, who also runs Tesla, said in May that the deal was “temporarily on hold” because of concerns about fake accounts.

And last week, he said he is seeking to terminate the deal because the company hasn’t provided the necessary data and information he needs to assess the prevalence of fake or spam accounts.

Twitter has sued Mr Musk over his attempts to walk away from the deal in an effort to force him to honour the terms of the deal.