Twitter’s newest board member appears to have begun his tenure by violating securities laws—while raking in $156 million in the process.
According to a new report from The Washington Post, Elon Musk had accumulated a 5 percent ownership stake in Twitter by March 14, at which point he was obligated to alert investors. But he didn’t. Instead, he kept buying up shares at “an artificially low price,” the paper said, ultimately acquiring a 9.2 percent interest in the social media company.
Once news of Musk’s investment was publicized this week, shares of Twitter spiked more than 25 percent. By buying in advance of that surge, the billionaire may have netted an extra $156 million, David Kass, a professor at the Robert H. Smith School of Business, told the Post.
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“I really don’t know what’s going through his mind. Was he ignorant or knowledgeable that he was violating securities law?” he said.
The filings also complicate a narrative that emerged in recent days: that Musk chose to invest in Twitter after polling his followers in late March about whether the platform adhered to principles of free speech.
In reality, according to filings, Musk has been buying stock since January.
The Tesla and SpaceX CEO has repeatedly found himself in hot water with federal regulators. Most infamously, he tweeted in 2018 that he was considering taking the electric carmaker private at a price of $420 per share (a number often associated with marijuana), and that he had already secured funding for the endeavor.
That ended up not being accurate, at least in the eyes of the SEC. Following a settlement with the commission, Musk stepped down as Tesla’s chairman and agreed to have an attorney monitor his tweets. He has since battled with the SEC over its continued oversight of his behavior, which he has likened to harassment.
Musk and his brother are also reportedly being investigated for possible insider trading violations pegged to his brother’s sale of Tesla stock last year. In a statement to the Financial Times, the billionaire vehemently denied the allegations and argued that an official at the SEC was “grinding his very tiny axe yet again.”
It remains to be seen what action, if any, the SEC will take in response to Musk’s delayed Twitter disclosure.
