Elon Musk’s Early Twitter Purchase Under FTC Scrutiny

Elon Musk’s $44 billion Twitter takeover is unlikely to raise antitrust concerns. But what is already being scrutinized is Musk’s failure to comply with rules regarding disclosure of his initial 9% stake, according to people with knowledge of the situation.

The Federal Trade Commission recently opened an inquiry into whether Musk failed to comply with an antitrust reporting requirement as he amassed his initial 9.1% stake in Twitter between the end of January and the beginning of April, The Information has learned. At the heart of the inquiry is whether Musk was initially buying as someone who wanted to influence Twitter management or whether he saw himself as more of a passive shareholder. Notably, Musk’s initial filing with the Securities and Exchange Commission categorized his purchase as a passive stake—which immediately raised questions given his public comments about how Twitter is run.

There have also been questions about whether Musk’s initial filing with the SEC, three weeks after he passed the 5% threshold, missed SEC filing deadlines. It couldn’t be learned if the SEC was also investigating Musk’s disclosures. For both the FTC and the SEC, the significance of Musk potentially breaching technical reporting requirements is not clear. But the FTC’s inquiry does put Musk in the agency’s crosshairs even before the government starts reviewing the actual takeover.