Twitter Inc's fight with Elon Musk to enforce his $44 billion deal to buy the social media platform could attract scrutiny from the U.S. securities regulator over whether Musk has misled the market during the course of the deal.
In its Tuesday lawsuit, Twitter not only alleged that Musk was really backing out for financial reasons and that he broke the terms of the deal, but that Musk also broke U.S. securities rules by failing to disclose his 9% holding in Twitter on time.
Legal experts say the case could attract scrutiny from the U.S. Securities and Exchange Commission , which has been locked in a feud with Musk since the billionaire tweeted in 2018 that he had funding secured to take Tesla private when the SEC found he did not. The agency already has several open probes into Musk, according to court filings and media reports.
In April, the SEC asked Musk whether the disclosure of his Twitter stake was late and why it indicated that he intended to be a passive shareholder, adding that his response should address public statements he had made about whether Twitter adheres to free-speech principles, a regulatory filing shows. Musk refiled the disclosure to indicate he was an active investor.
The social media company also cited other "baseless" public claims Musk subsequently made, including that Twitter's fake users could be as high as 90%. On May 17, Musk tweeted that the deal "cannot move forward" until he got more information.
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