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By Abinaya V and Nivedita Balu
(Reuters) -Tesla Inc Chief Executive Elon Musk disclosed on Monday he had abandoned a plan to join Twitter Inc's board just as his tenure was about to start, the latest move by the world's richest man that defied corporate America's norms.
Musk revealed last week he had accepted a board seat at Twitter, contradicting a regulatory filing he had published a day earlier in which he described himself as a passive investor.
Sources told Reuters at the time that Musk asked Twitter for a board seat weeks before the social media company agreed to the arrangement.
Musk and Twitter did not disclose the reason for the u-turn. Musk said in a regulatory filing on Monday he could now increase his 9.1% stake in Twitter or push the company to pursue transactions, even though he has no such plans at this time.
There was no sign that Twitter was worried that a hostile bid from Musk was imminent. In announcing the development, Twitter disclosed no shareholder rights plan, known as a "poison pill," that would force dilution if Musk tried to raise his stake above a certain threshold.
However, Twitter Chief Executive Parag Agrawal warned Twitter employees in a tweet on Sunday of "distractions ahead," a possible reference to Musk's criticism of the company through tweets. He added that he believed Musk's withdrawal was "for the best."
A Twitter spokesperson did not respond to a request for comment.
Twitter shares were up 2.6% at $47.48 in afternoon trading in New York on Monday. They are up more than 20% since Musk disclosed his stake in Twitter on April 4. Wall Street analysts say Musk's involvement attracted legions of retail investors to the stock.
Securities experts have pointed out that by delaying and mischaracterizing the disclosure of his stake in Twitter, Musk bought the shares more cheaply, saving himself $143 million by one estimate. It is unclear whether this would be a consideration for Musk, whose net worth is pegged by Forbes at $274 billion.
Musk could not be reached for comment.
Musk deleted on Monday many of the tweets he posted over the weekend about the social media platform. It was not clear what prompted the move. The tweets ranged from a call to remove advertising on Twitter to dropping the letter "w" in the social media company's name.
Jacob Frenkel, a former enforcement attorney at the U.S. Securities and Exchange Commission (SEC), said Musk's reversal was unconventional but did not appear to violate any rules.
"Merely being extended an offer to join the offer to board, contemplating doing so and deciding not to is not a violation of securities laws," said Frenkel.