Elon Musk's Twitter stock purchases under scrutiny by Federal Trade Commission - report

Elon Musk's Twitter account
The Tesla CEO is already being sued for waiting too long to disclose his purchases. Photo credit: Getty Images

Tesla Chief Executive Elon Musk's initial nine percent stake purchase in Twitter is being probed by the Federal Trade Commission (FTC), The Information reported on Thursday, US time.

The FTC is looking into whether Musk complied with an antitrust reporting requirement when he bought his stake in the social media company in early April, the report said, citing people with knowledge of the situation.

Companies that fail to abide by rules about reporting significant stock purchases or other acquisitions can be fined up to US$43,792 per day.

The controversial billionaire is already being sued by former Twitter shareholders who claim to have lost money because he didn't report his purchases on time.

In a proposed class action suit filed in Manhattan federal court, the shareholders said Musk has made "materially false and misleading statements and omissions" by failing to reveal he had invested in Twitter on time.

That deadline was required under federal law, with investors having to disclose within 10 days when they have acquired five percent of a company, which in Musk's case would have been March 24.

He didn't do so until April 4, saving him up to US$156 million (NZ$226m) on the cost of his shares, according to the Washington Post.

That could lead to more problems between Musk and the Securities and Exchange Commission (SEC), which this week turned down his bid to quash an agreement that requires oversight of his tweets about Tesla.

The SEC has subpoenaed Musk and the company wanting to know whether his online poll about selling 10 percent of the electric vehicle company was preapproved, as required by a 2018 deal that also saw both Musk and the company fined US$20 million.

After the initial Twitter stock purchase, Musk, the world's richest man, offered to buy the company for US$54.20 per share in cash, which Twitter agreed to earlier this week.

There is little expectation that Musk's potential purchase of Twitter will be rejected by antitrust enforcers.

The focus of the FTC inquiry is whether Musk bought the stake to influence Twitter's management or if he looked to be a passive shareholder, according to the report.

In his April 4 filing with the US Securities and Exchange Commission, Musk characterised his stake as passive.

Twitter said it did not have a comment on the report, while the FTC declined to comment.

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Reuters / Newshub