Elon Musk is under federal investigation, Twitter says in court filing

WILMINGTON, Delaware, Oct 13 (Reuters) – Elon Musk is being investigated by federal authorities over his conduct in connection with his $44 billion takeover for Twitter Inc (TWTR.N), the company said of social media in a court filing released Thursday.

While the filing said it was under investigation, it did not say what the exact purpose of the investigations was and which federal authorities were conducting them.

Twitter, which sued Musk in July to force him into the deal, said lawyers for the CEO of Tesla Inc (TSLA.O) claimed “investigative privilege” by refusing to hand over documents he had asked.

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In late September, Musk’s attorneys had provided a “privilege log” identifying the documents to be withheld, Twitter said. The newspaper was referring to drafts of a May 13 email to the U.S. Securities and Exchange Commission (SEC) and a slide presentation to the Federal Trade Commission (FTC).

“This ‘hide the ball’ game must stop,” the company said in the court filing.

The court filing, which asked Delaware Judge Kathaleen McCormick to order Musk’s attorneys to provide the documents, was filed Oct. 6 – the same day McCormick suspended litigation between the two sides after Musk reversed course and said he would continue with the deal.

Alex Spiro, a lawyer for Musk, told Reuters that Twitter’s court filing was a “misdirection” and claimed, “It’s Twitter executives who are under federal investigation.”

Tesla founder Elon Musk attends Offshore Northern Seas 2022 in Stavanger, Norway August 29, 2022. NTB/Carina Johansen via REUTERS/File Photo

Twitter declined to comment on Spiro’s statement. He also declined to comment when asked by Reuters for his understanding of any investigation into Musk.

The SEC did not immediately respond to a request for comment, and the FTC declined to comment.

The SEC questioned Musk’s comments on the Twitter acquisition, including whether a 9% stake he had accrued before announcing his bid was late disclosed and why that indicated he had the intention to be a passive shareholder. Musk then refiled the disclosure to indicate he was an active investor.

In June, the SEC asked Musk in a letter whether he should have amended his public filing to reflect his intention to suspend or exit the deal.

The Information, a technology news site, reported in April that the FTC was investigating whether Musk failed to comply with the antitrust reporting requirement relating to an investor’s intentions to be a passive or active shareholder.

Twitter, however, said in June that the takeover deal with Musk had allowed an antitrust waiting period for review by the FTC and the US Department of Justice. Read more

McCormick gave Musk until October 28 to complete the acquisition. If the agreement is not reached by then, a trial date will be set for November.

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Reporting by Tom Hals in Wilmington, Delaware, Sheila Dang in Dallas and Hyunjoo Jin in San Francisco; Editing by Peter Henderson and Edwina Gibbs

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Tom Hall

Thomson Reuters

Award-winning journalist with more than two decades of experience in international news, focusing on high-stakes legal battles on everything from government policy to business negotiation.