Allegation: securities fraud
Twitter shareholders are suing Musk
04/13/2022 02:56 am
Elon Musk is not only an avid Twitter user, but also the largest single shareholder in the company. However, this has been known for a long time: the multi-billionaire probably disclosed his acquisitions later than the US securities law allowed. Other shareholders are therefore demanding damages.
Tesla boss Elon Musk is threatened with legal trouble after joining Twitter as a major investor. Former shareholders of the company on Tuesday launched a potential class action lawsuit against the multi-billionaire in a court in New York over alleged securities fraud. This was announced by the competent law firm.
The plaintiffs accuse Musk of not making his Twitter investment public within the statutory reporting period. As a result, a stock market reaction was delayed and the share price was kept artificially low while he continued to expand his stake. The plaintiffs are seeking undisclosed damages. Musk has not yet commented on the lawsuit.
Strict regulations actually apply when holdings in US companies exceed the five percent threshold. On April 4, Musk announced in a mandatory notification to the SEC that he held a good nine percent stake in Twitter. This news caused the share price to rise sharply. But according to the lawsuit, Musk’s stake was already more than five percent in mid-March – without being announced within ten days. As a result, Musk was able to continue buying cheap Twitter shares until the April 4 announcement. Investors who sold during this period were disadvantaged.