Elon Musk wanted to act fast once he realized he could make a huge difference to the impact of social media when he bought $3 billion worth of Twitter stock. As announced, the platform has announced that it is adding a edit functionality the day after Musk was added to the company’s board. But Elon didn’t plan ahead and his rash decision could cost him a major problem with none other than the SEC. It turns out that anyone who makes a purchase as massive as the one Musk made must first notify the SEC and then act. According to a Washington Post report, regulations require Tesla’s CEO to notify the market when the stake in the social media company has exceeded the 5% threshold.
This delay instantly helped him pocket an impressive $156 million in seconds, which happened after Elon made the decision to acquire a 9% stake in one of the largest social media companies in the world. With this decision, Musk has become the largest shareholder of one of the most influential platforms that exist on the Internet. On March 14, Elon’s investment in Twitter hit 5% but markets received no notification of the purchase until last Monday. which was also when the new broke around the world. This translates into a serious violation of federal law, as Musk kept the stock price low by failing to notify investors of his purchase as he continued to buy shares. By the time Musk filed his disclosure forms, the platform’s share price soared as much as 30%.
Can Elon Musk end up in prison for these violations?
To add insult to injury, Elon Musk could also have misled the public when he indicated he would be a “passive investor” only to be announced as a Twitter board member. Experts say there’s a good chance Elon will get jail time for the federal crime he committed, but he’ll likely get a slap on the wrist in the form of a six-figure fine. Remember that Elon is currently the richest human being in the world and is worth $280 billion according to Forbes. Elon has been in trouble with the SEC for various errors or misleading information he has shared over the years. Although this is certainly the most significant violation he has committed.