The Securities and Exchange Commission has sent a letter to Elon Musk asking him about his Twitter activity related to the potential purchase of the social media platform.
A regulatory filing published on Thursday and reviewed by CNBC focuses on how Musk represented his commitment to the deal, even during his probe of Twitter for more information on the number of fake or spam accounts.
Although the filing does not name the tweet in question, the issue appears to be around this tweet from Musk on May 17 and whether it would have triggered the requirement for an amendment to an earlier Schedule 13D regulatory filing.
20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.
— Elon Musk (@elonmusk) May 17, 2022
As per the letter from the SEC:
The term ‘cannot’ suggests that Mr. Musk and his affiliates are exercising a legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition. Yet, we note that the Schedule 13D has not been amended to reflect the apparent material change that has occurred to the facts previously reported under Item 4 of Schedule 13D.
Per Musk’s lawyer, he did not believe the tweet in question:
triggered any required amendment to his previously filed Schedule 13D. 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.
So, it appears we might have another Musk vs the SEC showdown on our hands. If you thought we would only get a legal battle over the Twitter deal, the court case might only be the aperitif.