Begin typing your search...

Lawsuit against Elon Musk over buying Twitter shares

Alleges that Tesla CEO illegally delayed disclosing his stake in the social media company, so he could buy more shares at lower prices; After revelation, Twitter's stock soared 27% to $50

Musk wants to buy Twitter for $41bn
X

Musk wants to buy Twitter for $41bn

  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo
  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo
  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo

San Francisco: Elon Musk's huge Twitter investment took a new twist on Tuesday with the filing of a lawsuit alleging that the colourful billionaire illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.

The complaint in New York federal court accuses Musk of violating a regulatory deadline to reveal he had accumulated a stake of at least 5 per cent. Instead, according to the complaint, Musk didn't disclose his position in Twitter until he'd almost doubled his stake to more than 9 per cent. That strategy, the lawsuit alleges, hurt less wealthy investors who sold shares in the San Francisco company in the nearly two weeks before Musk acknowledged holding a major stake. Musk's regulatory filings show that he bought a little more than 620,000 shares at $36.83 apiece on January 31 and then continued to accumulate more shares on nearly every single trading day through April 1.

Musk, best known as CEO of the electric car maker Tesla, held 73.1 million Twitter shares as of the most recent count Monday. That represents a 9.1 per cent stake in Twitter. The lawsuit alleges that by March 14, Musk's stake in Twitter had reached a 5% threshold that required him to publicly disclose his holdings under US securities law by March 24. Musk didn't make the required disclosure until April 4. That revelation caused Twitter's stock to soar 27 per cent from its April 1 close to nearly $50 by the end of April 4's trading, depriving investors who sold shares before Musk's improperly delayed disclosure the chance to realize significant gains, according to the lawsuit filed on behalf of an investor named Marc Bain Rasella. Musk, meanwhile, was able to continue to buy shares that traded in prices ranging from $37.69 to $40.96. The lawsuit is seeking to be certified as a class action representing Twitter shareholders who sold shares between March 24 per centand April 4, a process that could take a year or more.

Musk spent about $2.6 billion on Twitter stock — a fraction of his estimated wealth of $265 billion, the largest individual fortune in the world. In a regulatory filing Monday, Musk disclosed he may increase his stake after backing out of an agreement reached last week to join Twitter's board of directors. Jacob Walker, one of the lawyers that filed the lawsuit against Musk, told The Associated Press that he hadn't reached out to the Securities and Exchange Commission about Musk's alleged violations about the disclosure of his Twitter stake.

Bizz Buzz
Next Story
Share it