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Elon Musk’s Twitter stock purchase faces FTC probe: report

Elon Musk is reportedly facing a Federal Trade Commission investigation into whether he violated federal disclosure rules when he amassed a roughly 9% stake in Twitter — a move that preceded his blockbuster takeover of the social media giant in the US value of $44 billion.

The FBI is investigating whether Musk erred under the Hart-Scott-Rodino Act, a 1976 antitrust rule that requires investors to provide the FTC and the Justice Department with a “pre-notification.” The law applies to active investors who buy large shares in a company.

Musk, who began buying Twitter stock on Jan. 31, first disclosed his stake in the company in an April 4 filing classifying him as a passive investor.

The billionaire refiled the disclosure a day later to show that he was an active investor, after speaking publicly with Twitter’s board of directors about possible changes at the company.

The FTC wants to review communications between Musk and Twitter’s board of directors to assess whether he bought stock to play an active role in the company’s operations. The information reports, citing sources familiar with the matter.

FTC building
The FTC is investigating whether Elon Musk intended to play an active role in his investment in Twitter.
REUTERS

According to the report, Musk could face fines if the FTC’s investigation finds he violated the Hart-Scott-Rodino Act by failing to properly disclose his investment. However, the fine would amount to a maximum of $46,517 per day Musk failed to comply — a meager sum for the world’s richest person.

FTC officials did not immediately respond to a request for comment on the report.

Musk’s initial disclosure of his Twitter stock purchases earlier this month drew immediate scrutiny from regulators — some of whom noted that the billionaire missed the SEC’s filing deadline by several weeks when his stake in the company surpassed 5%.

Elon Musk
FTC investigation could lead to some fines for Elon Musk.
REUTERS

Musk crossed the threshold on March 14, but his stake didn’t become public knowledge until early April — meaning the broader market was unaware and stock prices weren’t reacting to his investment.

The SEC has yet to say publicly whether Musk will be scrutinized for this apparent misstep.

While Musk’s personal transactions are under scrutiny, antitrust authorities are not expected to block his $44 billion Twitter deal.

FTC Chair Lina Khan is leading a crackdown on big tech firms.
FTC Chair Lina Khan has signaled a crackdown on big tech deals and mergers.
Getty Images

As noted by The Information, Twitter has little overlap with Musk’s other business interests, such as Tesla, SpaceX, and The Boring Company. However, the FTC is led by antitrust crusader Lina Khan, who has signaled a crackdown on big tech deals and mergers.

Federal Communications Commissioner Brendan Carr, the panel’s senior Republican, called suggestions that the FCC could block the deal “preposterous.”

https://nypost.com/2022/04/28/elon-musks-twitter-stock-buy-faces-ftc-probe-report/ Elon Musk’s Twitter stock purchase faces FTC probe: report

DUSTIN JONES

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