SEC Seeks More Information From Elon Musk On Twitter Deal

SEC Seeks More Information From Elon Musk On Twitter Deal

July 22, 2022

The U.S. securities regulator has sought more information regarding billionaire Elon Musk’s tweets related to his planned $44 billion acquisition of Twitter.

The filing by Musk’s lawyers at Skadden Arps Slate Meagher & Flom LLP was in response to last month’s letter from the Securities and Exchange Commission. In the SEC letter dated June 2, Musk was asked about his May 17 tweet on Twitter’s potential spam and fake accounts, in which he said the “deal cannot move forward.”

According to the SEC, the term “cannot” suggests that Musk is exercising a legal right under the deal terms to suspend completion of the acquisition or otherwise does not intend to complete the acquisition. The regulator asked to explain the term, as to why that statement wasn’t a material change that should have been amended in his public filing to reflect his intention about the deal.

The agency asked for a written analysis of Musk’s current plans or proposals with respect to the acquisition of Twitter.

Musk’s lawyers replied that there was no material change to his plans and proposals regarding the proposed transaction at that time.

Last week, Musk sought to terminate his deal to acquire Twitter, claiming that the social media giant failed to comply with its obligations in the merger agreement.

Responding to Musk’s notice of planned termination of the merger deal, Twitter in a filing called Musk’s purported termination of the deal “invalid and wrongful.” Twitter also sued Musk in Delaware Chancery Court to enforce the merger agreement.

Musk has been under SEC scrutiny for the past few years. In 2018, he agreed with the agency to pay a $20 million fine and to step down as Chairman of Tesla after he threatened investors in a tweet that he had secured funding to take Tesla private, but the SEC found it was a case of defrauding the investors.

In March this year, the SEC asked a federal judge to let Musk’s usage of his Twitter handle continue to be monitored, as done as part of his 2018 agreement. Meanwhile, Musk asked the judge to end his agreement and to block a subpoena asking for records of pre-approval of a poll conducted on Twitter in November on the possibility of selling some of his stock.

In June, Musk appealed against the US District judge’s refusal to end his feud with the SEC regarding his tweets.

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