New Delhi: A lawsuit has been filed in New York federal court alleging that Elon Musk, who recently invested heavily in Twitter, lately disclosed his stake in the company to buy more shares at lower prices.
The complaint accuses the billionaire of violating a regulatory deadline to disclose the accumulation of at least 5 percent stake, news agency AP reported. According to the lawsuit, Musk waited until his stake nearly doubled to more than 9 percent before disclosing his position on Twitter. The complaint said the strategy hurt investors who were less wealthy and who sold their Twitter shares about two weeks before Musk accepted his stake.
Musk bought more than 6.2 million shares on January 31 at $36.83 per share, and has accumulated more as of April 1, his regulatory filing shows, according to an AP report. As of Monday, the CEO of electric car maker Tesla had 73.1 million Twitter shares, representing a 9.1% stake in the company.
How did Musk ‘violate the law’ by delaying his Twitter stake? Disclosure
Musk’s stake in Twitter reached a threshold of 5 percent as of March 14 and requires him to publicly disclose his stake by March 24 under US securities law, according to a lawsuit filed by investor Mark Bain Russella. Was. Musk, however, made this disclosure only on April 4.
Twitter stock rose 27 percent on April 1 to nearly $50 by the end of trading on April 4 following Musk’s disclosure. This allowed investors who sold shares prior to Musk’s disclosure to make significant gains, while Musk continued to buy shares at a rate of $37.69 to $40.96, the lawsuit said.
As the AP reports, the lawsuit is seeking to be substantiated as a class action lawsuit representing Twitter shareholders who sold shares between March 24 and April 4. The report said that this could take at least a year or more.
Jacob Walker, one of the attorneys who filed the lawsuit, told the AP that he had not contacted the Securities and Exchange Commission about the alleged breach by Musk regarding disclosure of his Twitter stake. “I think the SEC knows very well what it did.”
The report said Musk and his New York attorney Alex Spiro did not respond to the AP’s request for comment.
Musk, who has an estimated net worth of $265 billion, is said to have spent about $2.6 billion on Twitter stock. Reports suggest that he may further increase his stake, he said in a regulatory filing on Monday.
Meanwhile, he moved back Agreement to join Twitter’s board of directors.