A Twitter shareholder has filed a lawsuit against Elon Musk, alleging that the billionaire illegally delayed
disclosing his stake in the social media company in order to purchase more shares at lower prices.
The complaint, which was reportedly filed in federal court in New York, accuses Elon Musk of failing
to meet a regulatory deadline to disclose his stake in Twitter when it was at least 5%.
Instead, Mr Musk announced the details of his shares in the company only after they had nearly doubled to just under 10%, according to the complaint.
The class action, filed in federal court in Manhattan, accused the billionaire of making
“materially false and misleading statements and omissions” by failing to disclose his investment in Twitter
by the deadline of March 24, as required by federal law.
See tweet below;
New: Twitter shareholder sues Elon Musk in federal securities class action lawsuit, alleging that he "made materially false and misleading statements and omissions by failing to disclose to investors" his ownership stake in Twitter.https://t.co/SB1e8MX8NS
— Bobby Allyn (@BobbyAllyn) April 12, 2022
According to Mr. Musk’s regulatory filings, he purchased approximately 620,000 shares at $36.83 per share
on 31 January and continued to increase his stake in the company through 1 April.
Securities law in the United States requires investors to disclose their shares within 10 days of acquiring a 5% stake in a company,
which in Mr Musk’s case would have been on March 24.
When Elon Musk finally disclosed his stake in Twitter on April 4, the social media platform’s stock increased by about 27% from its close on April 1.
The lawsuit, filed on behalf of an investor named Marc Bain Rasella,
claims that the delay in disclosure cost several investors the opportunity to realize significant gains.