Elon Musk Twitter Ownership and its Concerns

            Elon Musk bought Twitter and maybe he use it as a tool to fight.

Elon Musk is the founder of Tesla and SpaceX, as well as one of the world's wealthiest people, but his Twitter account has become synonymous with him due to his online shenanigans. Despite his frequent use of Twitter, he's been a vocal critic, later claiming that the company is "failing to adhere to free speech values."

Whether or not Twitter is the "public square," as Musk characterized it, it is a publicly-traded corporation in which he purchased a more than 9 percent stake on April 4, according to an SEC filing (SEC). In the process, Musk became the company's largest shareholder.

Elon Musk and Twitter have always had a tumultuous relationship. With Musk now owning a 9.2 percent investment in Twitter and a seat on the board of directors, that's unlikely to change.

The stake is worth more than $3 billion, according to a regulatory document released on Monday. For comparison, Twitter co-founder and former CEO Jack Dorsey own slightly over 2% of the company, and Dorsey, who stepped down as CEO in November 2021, is stepping down from the board of directors when his tenure expires in May.

Musk's board term will run through 2024, according to a second regulatory filing from Twitter, thereby making him a more prominent role within the company than Dorsey in the future. "I'm looking forward to working with [Twitter CEO Parag Agrawal] and the Twitter board in the next months to create big changes to Twitter!" Musk sent out a tweet on Tuesday.

Musk accused the site of "failing to adhere to free speech values" in a March 26 tweet and claimed he was "seriously considering" creating his own social media network. According to a regulatory filing with the Securities and Exchange Commission, Musk purchased his Twitter stock on March 14, making him the platform's largest outside shareholder when he publicly chastised it.

Twitter stated on Tuesday that Musk's ownership share in the firm cannot exceed 14.9 percent for the duration of his board term, although analysts said that Musk may attempt to grow his ownership stake over time. Investors appear to be betting on Musk's ability to exercise control over Twitter: The shares of the social media company jumped 27% on Monday and continued to rise after Musk was appointed to the board of directors on Tuesday.

On Monday, Elon Musk became Twitter's largest shareholder, setting the stage for a potential political battle over the platform's attempts to prohibit damaging content, which the fiery Tesla CEO has warned are speeding up a move toward censorship.

Twitter shares soared after his surprising investment, which came days after he questioned the company's commitment to free expression and suggested he would create his own social platform. While it was not immediately obvious what role Musk intends to play, observers predicted that he may attempt an activist restructure that would alter how Twitter polices its platform and who it bans.

According to individuals associated with internal conversations who spoke on the condition of anonymity to discuss sensitive subjects, some inside Twitter are concerned that Musk will push Twitter in a libertarian route, away from removing or restricting accounts that do social harm.

Musk owns 9.2 percent of the social media company, according to a Securities and Exchange Commission filing, which pushed shares up 27%. His holding, which is now worth about $2.9 billion based on Twitter's Monday closing price, surpasses that of Dorsey, who owns a 2.3 percent interest. "Oh hi lol," Musk tweeted, welcoming fans of the social media app where he makes many of his most eccentric statements, including news about Tesla, which he leads. Musk appeared to recognize his influence's potential almost immediately. By Monday evening, he'd started a Twitter poll asking users if they wanted an edit button, which has been a point of dispute between users and the app's leadership for some time.

What kind of power will Musk wield at Twitter?

Musk's stake in Twitter is technically classified as a "passive" stake, meaning it is just below the 10% threshold that qualifies a shareholder as an "active" or "activist" shareholder. Passive shareholders, on the whole, don't try to exercise much influence over a company's decision-making. Musk, however, may be an exception to the rule.

Musk will join Twitter's board of directors as the company's 12th member, at least until Dorsey steps down next month. Musk will also have a 9 percent stake in the company's stock. In practice, this means he'll need a lot of help from other board members and shareholders to have any future ideas approved.

However, given Musk's status as a high-profile and outspoken investor with more than 80 million Twitter followers, the world's richest person is already in a strong position to influence change. And Twitter's hasty appointment of Musk to its board of directors demonstrates that the company's leadership is at least open to Musk's ideas.

Elon Musk's investment in Twitter and how it may affect his legal battles with the Securities and Exchange Commission

Elon Musk's ongoing legal battles with the Securities and Exchange Commission (SEC) over Twitter (TWTR) posts became even more complicated this week when an SEC filing revealed that the Tesla (TSLA) CEO had become the social media company's largest shareholder, followed by Musk's appointment to its board of directors.

According to securities experts, Musk's new ownership position in Twitter should have no bearing on his current legal struggle with the SEC. His filings, on the other hand, may rekindle old feuds.

According to Marc I. Steinberg, a former SEC enforcement attorney, and professor at Southern Methodist University's Dedman School of Law, "Mr. Musk is allowed, so long as he is behaving in a legally compliant manner... to amass this ownership as a passive investor." "It's a question of speculation as to what the SEC might do."

Musk agreed to a settlement with the Securities and Exchange Commission (SEC) in 2018 after the SEC claimed that certain of his tweets violated securities legislation. Musk agreed to have Tesla pre-approve his tweets and other written communications that might contain information important to Tesla or its shareholders as part of a consent order.

However, in court documents filed in February 2022, Musk and Tesla accused the SEC of improperly exploiting its subpoena power to probe his and Tesla's compliance with the agreement. Musk filed a motion with the court on March 8 to have the consent decree terminated or amended. The court has yet to make a decision on the request.

Shareholders who acquire 5% or more ownership in a publicly-traded firm must report their involvement within 10 days of the transaction, according to SEC guidelines. Musk signed his passive investor filing outside of that timeframe, on March 14, 21 days after his reported stock purchase.

According to the experts, Musk's inability to meet a stipulated disclosure date sends a negative message to the New York federal court hearing his request to reverse the 2018 settlement agreement with the SEC. Furthermore, his papers appear to offer the SEC new hooks for alleging additional securities breaches.

According to Steinberg, Musk may have initially filled out the erroneous form by indicating that he was a passive rather than active shareholder. SEC laws compel shareholders to make that distinction public, indicating the shareholder's authority to affect the company's management or policies directly or indirectly.