An investor in Twitter Inc. has filed a securities class action lawsuit against Tesla CEO Elon Musk, alleging that the latter neglected to disclose his 5% ownership of the social media company when he was legally required to do so. Lawsuits allege that the delay allowed Tesla CEO Elon Musk to buy more Twitter stock in order to defraud Twitter stockholders.
The case was filed in Manhattan federal court on Tuesday by Marc Bain Rasella for “all investors who sold or otherwise disposed of Twitter, Inc. securities between March 24, 2022, and April 1, 2022, inclusive.”
Elon Musk began buying Twitter stock in January, according to the lawsuit, and by March 14, he had more than 5% of Twitter’s stock. The SEC mandates that investors file a Schedule 13 within 10 days of exceeding the 5% ownership threshold, which the SEC enforces. Musk reportedly waited to file the paperwork until he owned a 9.1% share of Twitter before doing so.
“When Musk finally filed the required Schedule 13, disclosing his ownership stake in Twitter, the company’s shares increased from $39.91 per share on April 1, 2022, to $49.97 per share on April 4, 2022 – an increase of about 27%,” the lawsuit stated.
The lawsuit claims that Musk was able to unfairly lower the price of Twitter stock by concealing his growing stake in the company.
Twitter acknowledged on April 4 that Musk had purchased 9.2% of the company’s stock. Following a series of comments by Tesla CEO Elon Musk, Twitter CEO Parag Agrawal revised his attitude earlier this week and said he was no longer interested in having Musk on the company’s board, despite the fact that Musk had previously expressed interest in joining the board.
