Elon Musk's investment in Twitter could raise the interest of the Securities and Exchange Commission.
The Tesla chief executive filed a disclosure form required by regulators when he purchased 9.2 percent of the social media company's stock, but the notice came several days late and did not include a standard certification that shows an investor's passive status, reported the Wall Street Journal.
The SEC has previously taken action against investors who repeatedly missed ownership-disclosure deadlines, and the issue could hurt Musk in his ongoing legal battles with the regulatory agency.
“He is making all these claims the SEC is harassing him and going after him for nothing, and if he goes ahead and violates a pretty straightforward rule, that is certainly not going to help his argument with the judge,” said David Rosenfeld, a former senior SEC enforcement attorney who now teaches law at Northern Illinois University.
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Just last month Musk asked a federal judge to terminate a 2018 fraud settlement with securities regulators that requires some of his tweets about Tesla to be pre-approved by company lawyers, arguing that the SEC is abusing Twitter's social media policy.
The SEC might also ask about his status as a passive shareholder due to his recent tweets about the company's content-moderation policies and statements about creating a competing social media company or adding an edit button for users.
“He is not trying to influence the board or the strategy of the company, that would be his counterargument,” said Howard E. Berkenblit, a partner at law firm Sullivan & Worcester LLP. “Like any other shareholder, he is just expressing his opinion. Certainly, the SEC could ask him questions and ask him to defend that.”
