We now face the prospect of the world’s richest person, Elon Musk, actively running the world’s biggest social media platform, Twitter, after a significant development on Tuesday.
A day after he described the 9.2% stake he had bought in Twitter as passive investor, the Telsa CEO changed the form for the original filing and now classes himself as an activist shareholder. The amendment came shortly after Twitter appointed Musk to its board on Tuesday.
It raises the question — did he deliberately misclassify himself?
Musk now admits that he invested in the company with the goal of effecting change and that his stock purchases began months ago, in late January. His original filing was what’s called a “13G form” from the US Securities and Exchange Commission (SEC) which suggests the investment was passive, meaning he would not seek to change the company.
But on Tuesday afternoon he made a new filing — a “13D form” that is more often used by activist investors. That filing detailed an agreement Musk reached with the social media firm earlier in the day.
The new filing requires more disclosure, and shows that Musk began accumulating Twitter stock on January 31, with the purchase of more than 620,000 shares. Musk then purchased the shares in every available trading session until April 1, with total daily shares purchased ranging from 371,075 on February 15 to more than 4.8 million shares on February 7.
The SEC requires that investors disclose when they have purchased more than 5% of a company’s stock on one of the two forms within 10 calendar days of hitting that threshold.
Musk admitted on the first form he filed that he had passed that threshold on March 14, but did not disclose the purchases until Monday of this week (April 4), missing the deadline by more than a week.
Twitter announced Tuesday morning that Musk would take a board seat in exchange for agreeing not to push his stake in the company to 15% or higher. The same information is reflected in Tuesday’s SEC filing from Musk.
Twitter shares are up nearly 30% since Musk first disclosed his stake in the company. Those gains have added more than $9 billion to Twitter’s market value at just over $US40 billion.
We now have a situation where the world’s richest man has flouted stockmarket disclosure rules at will, even though he is a proponent of freedom and speech but not a believer in transparency and equality. One rule for him and another rule for everyone else.
After acquiring his stake at the end of January (originally his first disclosure wrongly suggested March 14 was the start date), Musk has spent weeks influencing discussions around the future of Twitter — its algorithm, how it polices speech, and even whether a “new platform” was needed — all without disclosing that he was a part-owner and in talks to join the board.
In many respects Musk is a rich Donald Trump which makes him far more dangerous.
US media, politicians and business people are now watching if the SEC — under its activist head, Gary Gensler — will take on Musk and prosecute him for his woeful and wrong and misleading disclosure of his buying and lack of transparency.
That could be a far more telling controversy than anything Donald Trump tried with Twitter and regulators (he was almost untouchable until the end).
It’s worth watching what Musk does but it’s ridiculous to say he’s anything like Trump.
If the main thrust of this article is how Elon Musk might compromise public debate by subverting the integrity of social media, it barely scratches the surface.
Musk’s transition from 13G to 13D was compliant with regulations, and is plausible because his intent may have changed in accordance with his market behaviour.
The one week lag in disclosure is neither here nor there. Musk’s presence on the board, and his holding in Twitter is likely to last far longer than one week. What is significant is his long term intent, which has so far not been revealed or explored.
Musk is not immune to the standard penalty that would be imposed for such a lag, and presumably, will comply with it by paying a small fine, or whatever the penalty is. If the penalty is inadequate, that’s a deficiency of the SEC regulations, not a Musk character flaw, and hardly a strong basis for the accusation of “woeful and wrong and misleading“. Such accusations would be better supported by Musk acquiring stock through a hidden proxy, which is not what is being reported here.
So, what is the actual risk or danger with Musk acquiring stock in Twitter?
“In many respects Musk is a rich Donald Trump which makes him far more dangerous.”
Really?
Musk is far richer than Donald Trump, but how does that make him “more dangerous”? The article doesn’t say.
What we do know is that Donald Trump used Twitter to get elected, and then foment a riot, after 4 years of using it as a communications medium that debased public debate and distorted the press and TV news and current affairs media into trivial jeuvenility.
Is it not possible that Musk could use his influence to make the platform less succeptible to demogogary, more interesting, more useful, or somehow more beneficial to society, using whatever criteria you like? We don’t know. That substantial conversation has not yet begun.
Agree with your comments.
Firstly, I’m not sure what the author of this piece is really trying to say.
And secondly, it all sounds like a bit of a srtorn in a teacup to me.
I’m sure there is a lot more sinister share market activity going around than this.
Musk clearly has well above average intelligence. But he’s also an unreliable loose cannon with plenty ammunition ($$$) to self indulge.
That’s not how it works for the Ubers and Teslas of the world. For them it’s break the rules – all of them – and say to regulators “try to stop me”.
I’m now weaning myself off Twitter.
You won’t know yourself, social media is vile and your life will instantly improve.
I was thinking of getting on it for the first time just so I can engage in some high falutin’ trolling. But time is a wasted.
I divorced Twitter after Trump’s 2020 election campaign. It took about a month for the divorce decree to be made absolute. I have never regretted it.
I’ve done it successfully. (Probably 2 years now) I got so fed up with its mad algorithms messing with my feed, and complained about it many times to Twitter…..but nothing changed…they are just a stupid company. I still have the app and still follow heaps of people, I’ve turned off ALL notifications and only use it occasionally to message someone (prominent) basically to say thanks, for some article (journalists) or business owner using their position to do something good. No temptation at all to use it regularly. Don’t use any other social media…..much more productive to throw them all under a bus. I just wish Musk would spend his time getting on with some of the great stuff he’s done/doing. Musk is running the risk that he’s going to damage the Tesla brand, by doing all the stupid…..he’s close to turning me off Tesla.
Proud to say I was never seduced by twitter. Always regarded it as a place for twits. Ditto the rest of antisocial media. As for Musk the man, he regards himself as a bit out of the ordinary and may well decide that he deserves to cut corners here and there. He is different so expect difference but this shouldn’t include bending or breaking rules.