Elon Musk was perceived by many as one of the most impressive entrepreneurs in the world, and in every company or project in which he was involved, he attracted tremendous media attention. Some would say that by posting a single tweet on Twitter, Musk can affect the general public and even the stability of the world’s stock exchanges.
In recent days, the billionaire has decided to announce that he has purchased 9.2% of Twitter shares, for about $ 3 billion. In addition, Musk has joined the company’s board of directors, and will serve in that position until 2024. Throughout that period and 90 days thereafter, he will be prohibited from holding over 14.9% of the shares of the social network. All parties greeted and set off, and naturally Twitter shares soared by tens of percent on Wall Street.
Musk may get involved again with the Securities and Exchange Commission
The share purchase made Musk the largest shareholder on Twitter. However, the way the move was made may seem dubious, opening a front against the SEC (US Securities and Exchange Commission). This is not the first time Musk has found himself in a confrontation with the authority: in September 2018, she accused him of making false and misleading statements to investors, when he announced on Twitter that he was considering turning Tesla into a private company priced at $ 420 per share, while securing financing. Eventually, the deal did not materialize, leading to Musk being forced to pay $ 20 million to the authority, and temporarily relinquishing his position as chairman of Tesla’s board of directors.
However, the saga is not over, and in 2020 the authority claimed that Musk posts on Twitter material business information about the company, which could affect its share price, and therefore violates the agreement.
Now, after acquiring some of the company’s shares, the billionaire has made two mistakes that could cause him another regulatory headache. First, as someone who bought over 5% of the company’s stock, Musk had to disclose his holdings within 10 calendar days of the acquisition, but did so after 21 days. In addition, during the period and prior to the publication of the required information, Musk posted polls and tweets on Twitter for the benefit of the social network itself, although he did not disclose the purchase of the shares, which he began buying about two months before the official publication. SEC penalties for concealing such material information usually amount to low fines, estimated at about $ 100,000 – a paltry sum for Musk.
A second mistake made by Musk, which could cost him dearly, concerns the submission of documents to the Securities Authority, as required by law. When submitting the documents, Musk submitted Form 13G to the SEC, which is an abbreviated document that is submitted to the Securities Authority, and is usually used to purchase passive shares. This is a form that is usually submitted by shareholders who are not interested in influencing the company, and changing its control – while Musk is a member of Twitter’s board of directors.
Unlike in the past, this time Musk is trying to fix
Immediately after the announcement of his joining the Twitter board, Musk contacted his followers via the social network, asking them about adding the option to edit tweets. In response to the tweet, Twitter CEO Farag Agrwal called on surfers to respond with caution due to future implications, but most respondents chose to support the move. Twitter’s review of the move has caused many in the industry to raise an eyebrow, and was seen as one designed to prevent another public confrontation between Musk and the Securities and Exchange Commission.
In addition, many even wondered how Musk passively acquired the shares and still received a seat on the board.
It seems that this time, Twitter pushed to prevent the confrontation and Musk decided to give up. At the same time as the news of the new editing option coming to users in the near future was published, a new filing appeared in the SEC with new documents under the heading “Schedule 13D”. Now the form includes a reference to Musk’s plans regarding the company in general and regarding its share, among other things Musk undertook that he has no plans to try to sell the company or any of its subsidiaries.
According to a publication in the New York Times, unlike some of the other board members, Musk has not signed an agreement under which he undertakes not to influence the company’s policy, which raises further questions.
Musk’s relationship with Twitter has been very close over the years. With more than 80 million followers, Musk has fun with his audience and shares with them every idea that comes to mind, bizarre as it may be. An example of this was in recent days, when he asked his followers whether they thought Twitter was strict about freedom of expression, and he even raised the possibility of opening a competing social network.
The similarities between Musk and Trump
Musk, however, is not the first billionaire to find himself in a frontal battle with Twitter, and the last to do so was former US President Donald Trump.
Musk and Trump, two figures who share complex relationships with Twitter, use (or have used in Trump’s case) the social network to keep in touch with the general public, and critique various issues, including those related to Twitter itself. These are two different figures in the departments, who have often been portrayed in the traditional media in a negative light, and have used the social network to talk directly to their supporters, without barriers and restrictions.
The two billionaire has repeatedly accused Twitter of restricting freedom of expression, and Trump’s account was even blocked after he was accused that the series of tweets he posted contributed to riots in the Capitol. Like the former president of the United States, Musk also suffered from criticism of his Twitter tweets, such as misleading publications about Tesla’s future.
Despite the similarities between them, Trump and Musk have acted in different ways when it comes to their criticism of Twitter. Trump has launched a rival app, and has struggled to move its followers to the new social network. In fact, many see Trump’s social network, Truth Social, as an abandoned city, devoid of Messiah and surfing activity. The best proof of this is the fact that Trump’s last publication on the new network was last February – more than a month ago. What’s more, Trump has 855,000 followers in his new app, which makes up only 1% of his Twitter followers.
Musk, on the other hand, acted in a different way, possibly more creatively, and became the most significant shareholder on Twitter – which would require the social network to take his claims more seriously. In doing so, Musk taught a simple lesson – whoever wants to influence reality, should take out the checkbook, and pay accordingly.