Elon Musk, under federal investigation for the purchase of Twitter

Billionaire Elon Musk is the subject of a federal investigation for the purchase of Twitter, according to the social network company in a brief filed with a Delaware court. Although Musk has said that is willing to pay the originally agreed price, details about financing and future litigation have prevented the deal from closing. The judge has given a deadline for this until October 28. Meanwhile, the process remains open, although suspended.

Twitter wants to keep the double track open, the possible agreement with the eccentric tycoon and that of the lawsuit to force him to comply with the agreement. In this second way, the company has registered before the judge that is handling the case a document in which it mentions that investigation.

“Elon Musk is currently under investigation by federal authorities for his conduct in connection with the Twitter acquisition. Through his lawyer, he has exchanged relevant correspondence with those authorities in relation to his investigations, ”the lawyers of the social network point out in his letter. “Twitter wants those documents, because they have to do with key issues in this litigation,” they add, in a document initially reported by Bloomberg.

U.S. law provides for an evidentiary process called discovery by which the opposing parties in a lawsuit are obliged to disclose their own communications and documentation related to the case to the contrary. This has led Musk to reveal part of the messages that he exchanged with his partners, although there are suspicions that he has hidden some relevant communications.

Under this procedure, Twitter’s lawyers now want to know what Musk has said to those investigating his entry into the company’s shareholding and his subsequent offer. The extent of his investigation is unclear. Last May, the United States Securities and Exchange Commission (the SEC) published a letter in which he asked Musk for explanations for notifying late that he had acquired a significant stake in the company.

In addition, the SEC questioned whether Musk declared himself a passive investor in the company. The richest man in the world later amended his communication to the supervisor by saying that he claimed to be an active investor. It is also in doubt whether Musk correctly communicated the steps he was taking regarding the company. He began to question his willingness to buy the company through tweets without making any kind of official communication. In June, the supervisor sent him another letter with questions about it.

In that new letter, dated June 2, the SEC told Musk: “We note that on May 17, 2022, Elon R. Musk addressed the pending acquisition of Twitter and publicly stated via his Twitter that ‘this deal cannot go forward.’ The term ‘cannot’ suggests that Mr Musk and his associates are exercising the legal right under the terms of the merger agreement to suspend the closing of the Twitter acquisition or otherwise have no intention of completing the acquisition. However, we note that Exhibit 13D has not been modified to reflect the apparent relevant change that has occurred in the facts previously reported in point 4 of Exhibit 13D. Please provide us with a written analysis in support of any conclusion that an amendment is not required,” the supervisor indicated, among other things.

From the writing registered by Twitter, it is not clear if the investigation refers only to the initial delay or has a greater scope. The company claims that emails exchanged with the SEC and a slide presentation sent to the Federal Trade Commission that Musk’s lawyers refused to disclose as part of the discovery process be provided.