SEC investigating Elon Musk's Twitter disclosures

The U.S. Securities and Exchange Commission on Friday confirmed that it is investigating Elon Musk's early April disclosure of an ownership stake in Twitter, which came ahead of his agreement to acquire the company.

Driving the news: At is issue is the question of why Musk seemingly disclosed his 9.2% position in Twitter after he was legally required to do so, and if that disclosure was still faulty.

• Timing: Those who buy 5% or more of a publicly traded company must legally disclose that ownership within 10 days of acquisition. Musk, however, says he reached the threshold on March 14, but didn't disclose until 21 days later on April 4.
• Form type: The SEC also wants to know why Musk filed a "13G" form, which is meant for passive investors, rather than a "13D" form that would be for activist investors (including those with interest in making a takeover offer).

It's important to note that the SEC's letter came on the same day as Musk's disclosure, which is before he offered to buy Twitter outright.

Background: Musk and the SEC have tussled before, over his false claim about having "funding secured" to take Tesla private, but that mostly resulted in a slap on the wrist, which Musk remains sore over.

• Were the SEC to find that Musk again violated the law around his Twitter disclosure, it could seek harsher penalties.

Other developments: Musk this week disclosed that he plans to front all $33.5 billion of equity he committed to the deal, as he allowed a $12.5 billion margin loan to lapse (thus boosting Tesla stock). No word yet on if he's secured additional investment partners, although talks appear to be ongoing with Jack Dorsey and others.

• Speaking of Dorsey, he left Twitter's board on Wednesday, following the company's annual shareholder meeting. That had been expected, as he'd signaled those intentions upon stepping down as CEO last fall.
• Fellow director Egon Durban, a partner with private equity firm Silver Lake, resigned from Twitter board on Wednesday after shareholders voted against his nomination. But Twitter's board on Friday said it had decided against accepting Durban's resignation.

Final numbers: Twitter stock opened trading on Friday at $39.57 per share, a 27% discount to Musk's takeover price.