Elon Musk Sued Over Delay in Disclosing Twitter Stake
Updated · Apr 13, 2022
The lawsuit alleges that the billionaire’s delay netted his gains at the expense of other investors.
Musk Dragged to Court
Elon Musk is facing a class-action lawsuit over his delay in officially announcing his purchased stake in Twitter. A fellow investor, Marc Rasella, filed against the billionaire in a federal court in Manhattan, New York.
According to the lawsuit, the plaintiff lost money by selling his Twitter shares at “artificially deflated prices”. He alleges that Musk waited 11 days beyond the mandated SEC deadline to reveal his stake.
It has been an eventful period for the Tesla CEO since his share ownership of Twitter came to light. He initially agreed to join the company’s board, but then made an abrupt U-turn. That action has drawn plenty of speculation, with observers surmising that he plans to increase his stake in the future.
Elon Musk disclosed that he had acquired 9.2 percent of Twitter in an SEC filing dated April 4th. That automatically made him the social network’s largest shareholder. Twitter’s share price reacted following the announcement, rising by up to 27%.
Musk should have followed the securities regulation of disclosing his stake within 10 days of it crossing the 5% threshold, insists Rasella. That threshold expired on March 24th.
The lawsuit alleges that not doing so earned the billionaire significant gain at the expense of other shareholders:
“Investors who sold shares of Twitter stock between March 24, 2022, when Musk was required to have disclosed his Twitter ownership, and before the actual April 4, 2022 disclosure, missed the resulting share price increase as the market reacted to Musk’s purchases and were damaged thereby.”
It adds that if they had full disclosure of the market manipulation, shareholders involved may not have sold their stock.
Rasella says that Musk’s actions saved him about $143 million.
Daniel is an Economics grad who fell in love with tech. His love for books and reading pushed him into picking up the pen - and keyboard. Also a data analyst, he's taking that leap into data science and machine learning. When not writing or studying, chances are that you'll catch him watching football or face-deep in an epic fantasy novel.
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