Federal regulators are looking into Elon Musk's late declaration of his large investment in Twitter Inc., TWTR -2.48 percent, which allowed him to buy more stock without notifying other shareholders, according to people familiar with the situation.

The Securities and Exchange Commission is looking into Musk's late submission of a public form that investors must fill out when purchasing more than 5% of a company's stock. The disclosure serves as an early warning to shareholders and companies that a major investor may be attempting to gain control or influence over a firm.

Tesla Inc. CEO Elon Musk filed his paperwork on April 4, at least 10 days after his stake reached the threshold for disclosure. Musk has not publicly stated why he failed to file on time.

The SEC probe has never been made public, and an SEC spokeswoman declined to comment. Musk's lawyer did not respond to a message seeking comment on Wednesday.

Read next: Musk: Twitter ban on Donald Trump "mistake"

Daniel Taylor, a University of Pennsylvania accounting professor, said that Musk likely saved more than $143 million by not revealing that his trades had crossed the 5% barrier because the stock price would have been higher if the market had known about the billionaire's rising interest.

Related News

Musk's DOGE department aims to raise efficiency of defense spending

Musk set to become world's first trillionaire

Investors who cross that boundary must file a form with the SEC within 10 days indicating their stake. According to SEC filings, Musk's ownership surpassed 5% on March 14, indicating that he should have reported his stake by March 24.

According to a regulatory filing, Musk bought $513 million worth of stock between $38.20 and $40.31 per share after March 24. With 9.2 percent of Twitter's shares, he became the company's largest individual shareholder.

Taylor calculated that Musk saved more than $143 million on those trades based on Twitter's closing price of $49.97 on April 4, the day Musk declared his investment.

“The case is easy. It’s straightforward. But whether they’re going to pick that battle with Elon is another question,” said Taylor, referring to the prospect of a regulatory lawsuit against the outspoken entrepreneur.

Read next: UK parliament summons Elon Musk

Because not every investigation stems from informal activity, the SEC could end its investigation without filing civil charges.

According to Jill E. Fisch, a securities and corporate law professor at the University of Pennsylvania Law School, an SEC lawsuit against Musk would be unlikely to derail the Twitter deal because the company's board of directors has endorsed it and the SEC generally lacks the power to stop mergers or take-private transactions.

Regulators might seek a court order prohibiting Musk from voting shares he obtained without appropriate disclosure, but Fisch said the SEC hasn't done so in the past.

Musk stated on his initial disclosure form that he was a passive shareholder, meaning he had no plans to take over Twitter or affect its management or business. The next day, he submitted another form demonstrating his increased participation with the company, including an offer to join its board of directors on April 4th.

He made a bid to buy Twitter for $44 billion a week later. Twitter stockholders must accept the purchase, which is expected to finalize later this year. According to the sources, SEC investigators are looking into whether Musk's initial report should have mentioned more about his ambitions for the investment.