Elon Musk, founder of Tesla, is being investigated by the US authorities in relation to his attempted purchase of the Twitter company. This has been revealed by the lawyers of the social network in a brief presented before a Delaware court, in which they assured that the tycoon “is being investigated by the federal authorities for his conduct in relation to the acquisition of Twitter.”
The social platform has demanded access to the documents that Musk has handed over to federal authorities. “Through his lawyer, he has exchanged relevant correspondence with those authorities in relation to his investigations,” the social network’s lawyers point out. “Twitter wants those documents, because they have to do with key issues in this litigation,” they remark in a written advanced by Bloomberg.
The documents in question include a May 13 email to the United States Securities and Exchange Commission (the SEC) and a slide presentation to the Federal Trade Commission, according to a letter provided by the Twitter attorneys to Delaware Chancellery Court Judge Kathaleen McCormick. “This game of hide the ball must end,” the company said in the presentation to the judge.
According to El País, US law provides for a process of presenting evidence called discovery by which the opposing parties in a lawsuit are obliged to reveal their own communications and documentation related to the case.
The news of the Musk investigation, of which its exact focus and which federal authorities are carrying it out is still unknown, has emerged while Twitter tries to definitively close the sale of the social network to Musk. The Tesla founder first agreed last April to buy the platform for $44 billion, but has since tried to back out of the deal several times, citing concern about the number of fake accounts on the social network. However, last week the tycoon assured through a letter to the Twitter board that he was willing to pay the initially agreed price to take over the company.
The judge has given until October 28 to give both parties to reach a resolution, but that has not prevented the judicial process undertaken by Twitter to enforce Musk’s agreement to remain open, although suspended.
Before revealing his offer to buy all of Twitter, Musk had taken a 9.2% stake in the social network in a series of share purchases that began in January. The billionaire businessman, who had become the largest shareholder in the social network, had exceeded the 5% threshold that triggers the disclosure obligation.
Twitter’s lawyers had previously accused Musk of violating the regulation by failing to make his stake in the company public by March 24. The tycoon did not reveal the weight that he had in the capital of the social network until April 4. That month, the SEC sent a letter to Musk, which had indicated his intention to be a passive shareholder, asking for clarification about his behavior.
The Information, a tech news site, also reported in April that the FTC was examining whether Musk failed to comply with an antitrust reporting requirement related to an investor’s intentions to be a passive or active shareholder.
Knowledgeable sources assure the FT that Twitter and Elon Musk’s team are working to close the deal before the October 28 deadline. If it doesn’t close, the judge will set a trial date in November.
Alex Spiro, Musk’s lawyer, has assured Reuters that Twitter’s court filing, which was made on October 6, the same day the judge stopped the litigation between the parties, was a “misdirection” and added that “It’s the Twitter executives who are under federal investigation.” Twitter has declined to comment on Spiro’s statement.