While Musk did not certify on the first form that he had no intent to change or influence control of the company — he wrote “not applicable” — the use of the passive form was at odds with conversations he was already having with Twitter leadership. Twitter in a regulatory filing this month indicated Musk had started discussing a takeover as early as March 27. At issue is Musk’s 11-day delay in revealing that he purchased a 9.1 percent stake in Twitter before announcing the acquisition plan.
- It set a 10-day timeline for big investors to disclose when they acquire at least 5 percent of a public company.
- Elon Musk’s apparent breach of stock-disclosure rules in his Twitter takeover bid is putting pressure on regulators to revamp decades-old market safeguards that watchdogs say are failing to protect investors.
- Opponents of the proposal argue that cutting the disclosure window in half would chill attempts by activist investors to shake up companies, which they say can have broader benefits.
- He also advocates cutting the disclosure window to three days, one day longer than it takes a trade to settle.
- The agency is facing opposition from industry groups and hedge funds who want the SEC to leave the 10-day window in place.
“If we want to know who the people are who are big holders of these companies then why would we artificially delay it or try to dive into their minds to see why they are large holders? Shortening the deadline would “add unnecessary costs” for investors seeking to comply, SIFMA said.
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The agency is facing opposition from industry groups and hedge funds who want the SEC to leave the 10-day window in place. They are also pressing the agency to drop plans to change how certain financial derivatives count toward the 5 percent threshold and how groups are classified as beneficial owners. Musk has shown time and time again that he isn’t particularly willing to follow the rules,” Pitt said. Musk’s disregard for https://dotbig.com/markets/stocks/TWTR/ the regulation also highlights the limits to the rule’s deterrent effect, raising questions about whether investors willing to blow past a 10-day deadline would feel hemmed in by a shorter one. The Musk-focused debate is the latest example of how the billionaire has challenged the authority of the SEC in recent years, raising fundamental questions about whether regulators can rein in powerful executives who break the rules.
“Any delay whatsoever creates a huge opportunity for abuse and insider trading,” said Healthy Markets Association executive director Ty Gellasch, a former SEC official. Investor advocates are now pointing to Musk as an urgent example of why https://www.bankofamerica.com/ the Securities and Exchange Commission should crackdown on the practice. The agency has been trying to shorten the deadline for big shareholders like Musk to disclose their positions but is facing resistance from Wall Street lobbyists.
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The SEC proposed shrinking the disclosure window to five days in February, saying it would reduce “information asymmetry” by informing the wider market more quickly about potentially market-moving information. It’s part of a broader effort by the SEC under Chair Gary Gensler to update disclosure rules to keep pace with https://dotbig.com/ modern trading. Musk on April 4 filed the SEC’s shorter form required of passive investors who do not intend to influence the company. He then switched to the more detailed form required of activist investors the next day, after Twitter announced in a filing that it had agreed to appoint Musk to its board of directors.
It set a 10-day timeline for big investors to disclose when they acquire at least 5 percent of a public company. Gellasch, who represents investors including the Arizona State Retirement System and CalPERS, wants the SEC to revamp ownership disclosure forms to eliminate distinctions between activist investors, who want to overhaul a company’s operations, and passive investors. Opponents of the proposal argue that cutting the disclosure window in half would chill attempts by activist investors to shake up companies, which they say can have broader benefits. Elon Musk’s apparent breach of stock-disclosure rules in his Twitter takeover bid is putting pressure on regulators to revamp decades-old market safeguards that watchdogs say are failing to protect investors.
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The lag allowed the Tesla CEO to buy shares at a lower price — saving him roughly $140 million — as the rest of the market remained in the dark about what he was doing. Gellasch said the SEC should require heftier disclosure from everyone because an investor’s intent is irrelevant once they amass a big enough position. He also advocates cutting the disclosure window to three days, one day longer than it takes a trade to settle. The SEC confirmed in a filing Friday that twtr is investigating the Musk disclosure. The agency declined to comment on Musk’s actions or the criticism of the proposed rule changes. “In our view, what has been billed as a ‘modernization’ of existing rules is actually a dramatic expansion of scope and obligations — many of which seem unrelated to a data-driven identification of problems requiring attention,” the Securities Industry and Financial Markets Association said in a comment letter on the rule last month.
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Musk’s actions highlight why the rule matters, said Jill Fisch, a business law professor at the University of Pennsylvania law school. Twitter https://dotbig.com/markets/stocks/TWTR/ shareholders have already filed a class-action lawsuit against Musk, alleging that he ripped them off to the tune of $143 million.