Elon Musk Broke Law When He Bought Twitter Shares, Report Says

Billionaire Elon Musk looks on
Getty | JIM WATSON

News & Politics
Damir Mujezinovic

The founder and CEO of Tesla and SpaceX, Elon Musk, recently became Twitter's largest stakeholder, after buying 9.2 percent of the company's shares.

The news broke on Monday and was welcomed by many in the tech world, but also by conservative figures and Republican politicians, who expressed hope that Musk would loosen the social networking company's strict rules.

According to some experts, however, Musk broke the law when he purchased the shares.

How Much Money Did Musk Make?

According to The Washington Post, Musk disclosed that he had bought Twitter shares 11 days after doing so, which earned him around $156 million.

Investors are required by law to notify the Securities and Exchange Commission (SEC) when they surpass a 5 percent stake in a company -- which Musk failed to do on time.

After Musk disclosed his purchase, Twitter's share price rose approximately 30 percent and is now above $50 per share.

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Musk is the richest person in the world. By some estimates, he is worth $276 billion, so the $156 million he made by not disclosing his Twitter purchase on time is just a drop in the bucket for him.

"I really don’t know what’s going through his mind. Was he ignorant or knowledgeable that he was violating securities law?" asked David Kass, a finance professor at the University of Maryland’s business school.

Other legal experts told The Washington Post Musk will most likely get a slap on the wrist from the SEC, but noted that his move highlights just how easily billionaires break the law without ever facing consequences.

Will Musk Face Consequences?

According to Adam Pritchard, a professor of securities law at the University of Michigan’s law school, the SEC could argue in court that Musk needs to "part with the theoretical profit" he made from failing to disclose his Twitter purchase.

Pritchard noted, however, that the SEC "would have to be really angry with him to try that because they would have a good chance of a court rejecting that argument."

The professor added that individual shareholders have no right to sue Musk since he is not legally required to notify them of his purchases.

Twitter Employees Are 'Panicking'

Person holding a smartphone with the Twitter logo in background
Getty | SOPA Images

As per a new report from Reuters, some Twitter employees are "panicking" over Muck becoming the largest shareholder.

The employees are apparently concerned that Musk, as a self-described "free speech absolutist," will allow prominent right-wing figures, including former President Donald Trump back on the platform.

Others simply don't want to work for Musk.

"Some people are dusting off their resumes. I don’t want to work for somebody (like Musk)," a person familiar with the situation said.

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