The SEC is looking into why Musk allegedly made his disclosure late that he owned more than 5% of the company’s shares, which he must legally disclose within 10 days of meeting the threshold.
"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)," Axios reported. "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."
The SEC said in its letter that it wants a response from Musk even if he does not believe that their "comments apply to your facts and circumstances."
"The case is easy. It’s straightforward," Daniel Taylor, a University of Pennsylvania accounting professor, said. "But whether they’re going to pick that battle with Elon is another question."