Problems mount for Elon Musk as regulators examine his $44 billion tweet

Elon Musk and Twitter
The Tesla CEO was sued by Twitter earlier this week to force the deal through. Photo credit: Getty Images

The US securities regulator quizzed Elon Musk last month over a tweet in which the world's richest person raised doubts over whether he would move ahead with his US$44 billion acquisition of Twitter due to concerns over the number of fake users on the platform.

The Securities and Exchange Commission (SEC) asked Musk in a letter whether he should have amended his public filing to reflect his intention to suspend or abandon the deal, according to the June 2 letter made public on Thursday, US time.

The agency was referring to his May 17 tweet in which he said the "deal cannot move forward" until Twitter provided more data about how the company handled fake accounts.

The letter shows the SEC has been tracking Musk's statements on the blockbuster deal, increasing pressure on the Tesla Inc boss who has been locked in a feud with the SEC over his tweets about Tesla since 2018.

The agency already has several open probes into Musk, according to court filings and media reports.

The SEC said in the letter it had inquired about the May 17 tweet with Musk's legal counsel the following day, but had not received a response more than two weeks later.

The SEC added if Musk did not respond, it may decide to release publicly all correspondence, including the letter.

Musk's lawyers said in a June 7 letter that the tweet did not require an amendment because Musk's plans for the deal had not changed at that time.

Musk said last week he was terminating the deal because the social media company had breached multiple provisions of the merger agreement.

Twitter sued Musk earlier this week alleging he had broken the terms of the deal and made misleading statements about its operations.

Securities lawyers said they expected the SEC would scrutinise Musk's public statements on the deal to assess whether he misled the market as to his intentions, Reuters reported.

In April, the SEC asked Musk whether the disclosure of his Twitter stake was late and why it indicated that he intended to be a passive shareholder.

Musk later refiled the disclosure to indicate he was an active investor.