Musk’s investment may raise SEC concerns.
Elon Musk, the CEO of Tesla and SpaceX, surprised many this week by announcing that he had acquired a controlling stake in Twitter, his favorite social media platform. Speculation arose about his influence on the company’s direction as a significant investor, but Musk’s role will extend beyond that of an investor – he will be working for Twitter.
Twitter’s CEO, Parag Agrawal, revealed that Musk will soon join the Twitter board of directors.
“Through recent discussions with Elon, it became evident that he would bring valuable insights to our Board,” tweeted CEO Parag Agrawal. “His passionate advocacy and critical evaluation of the service are precisely what Twitter needs to strengthen itself both on the platform and in the boardroom for long-term growth.”
“Excited to collaborate with Parag & the Twitter board to enact significant improvements on Twitter in the upcoming months!” Musk eagerly responded.
Elon Musk purchased Twitter shares continuously from Jan. 31 to April 1, with daily shares bought ranging from 371,075 to over 4.8 million, as per a new filing. MarketWatch
Despite this significant opportunity for Musk, an issue has surfaced: when he acquired his stake in Twitter, he categorically stated he was a passive investor without intentions of direct corporate influence. This lack of disclosure could draw intense scrutiny from the US Securities and Exchange Commission (SEC).
Former SEC enforcement attorney Marc Steinberg commented on this matter to Fox Business, stating, “[Musk], as a nominee for director, doesn’t fit the passive investor definition. The consensus is that a director can impact an organization’s policies and practices, making them not a passive investor.”
