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SEC Sent Letter to Elon Musk About His Massive Twitter Stake

Elon Musk's Twitter account on a mobile phone
Elon Musk offered to buy Twitter for $44 billion in April.
James Martin/CNET

What's happening

The SEC revealed Friday it sent a letter to Elon Musk in April that asked why he disclosed his 9.2% stake in Twitter later than legally required. Musk struck a deal with Twitter to buy the social network for $44 billion.

Why it matters

The letter confirms the SEC is investigating Musk's belated disclosure and other issues, adding more woes to an already chaotic deal.

What's next

Twitter shareholders still need to approve Musk's bid to acquire Twitter.

The US Securities and Exchange Commission sent a letter to billionaire Elon Musk on April 4 about why he didn't disclose his large stake in Twitter on time.

The letter, published Friday, shows that the SEC has been looking into Musk's late disclosure. On April 4, the same day the SEC sent the letter, Musk revealed he bought a 9.2% stake in Twitter. The large stake made him one of the largest shareholders of the social influential network. He disclosed this information, though, at least 10 days after he was supposed to file a public form to the SEC that investors must submit when they buy more than 5% of a company's shares.

Musk struck a deal with Twitter in April to buy the social network for $44 billion, but there's been speculation swirling about whether the billionaire will back out. Musk has said the deal is on hold because he wants more details about the amount of spam and fake accounts on Twitter but he also revealed in a filing this week he plans to front $33.5 billion of equity he's committed to the deal. Twitter shareholders still need to approve the deal. The company has also reportedly denied the deal is on hold.

In early May, the The Wall Street Journal reported that the SEC was looking into this issue but the agency declined to confirm the investigation. The SEC declined to comment on Friday beyond what has been revealed in public documents. 

The letter the SEC sent to Musk includes four questions, including why he made the late disclosure. By not disclosing this publicly, Musk was able to buy more shares without alerting shareholders. The SEC also asked Musk why he filed a form meant for passive investor rather than a form meant for activist investors.

CNET couldn't immediately reach Musk for comment and he hasn't tweeted about the SEC letter. CNET reached out via Tesla's press email, but the company dissolved its PR department.