Elon Musk has been sued by Twitter shareholders. The investors accuse the billionaire of manipulating the share price of the social media platform before he submitted a takeover bid to the company. Now the shareholders are demanding damages from Musk through a class action lawsuit.
Elon Musk’s behavior during the takeover of the micro-blogging service Twitter has earned him a lawsuit. Shareholders of the social media platform accuse the billionaire of manipulating the company’s share price downward before he made his takeover bid. This was reported by the Reuters news agency. Now the Investor:innen want to obtain a class action lawsuit against the Tesla boss.
Elon Musk concealed ownership of Twitter shares
The lawsuit was filed in federal court in San Francisco last Wednesday, May 25, 2022. The Investors say Musk failed to disclose that he had purchased more than five percent of Twitter by March 14, 2022. This, they say, saved him $156 million.
It was only at the beginning of April that the SpaceX founder announced that he owned 9.2 percent of the social media platform. However, the U.S. Securities and Exchange Commission (SEC) requires that investors who acquire more than five percent of a company must disclose the shareholding within ten days. Elon Musk has exceeded this deadline.
“By delaying disclosure of his stake in Twitter, Musk manipulated the market and bought Twitter stock at an artificially low price,” the investors, led by William Heresniak of Virginia, said.
In addition, the plaintiff shareholders accuse Musk of intentionally depressing the stock price further when the billionaire publicly criticized Twitter. He briefly paused the takeover deal because he wanted to calculate the proportion of fake accounts on the social media platform. In the course of this, the Twitter share temporarily fell by up to 17 percent.
Twitter also accused by shareholders
In addition to Elon Musk, the shareholders are also targeting Twitter itself. The company was obliged to investigate Musk’s behavior. However, the plaintiffs are only demanding that the Tesla CEO pay a fine. They are not demanding damages from Twitter.
So far, neither Elon Musk nor his lawyer responded to requests for comment. Twitter has declined to comment on the lawsuit, according to Reuters. However, according to Reuters, the SpaceX founder recently pledged an additional $6.25 billion in funding to continue maintaining the Twitter offering. This suggests that he still plans to buy the micro-blogging service.
The current lawsuit by Twitter investors is not the first problem Musk has faced after announcing his takeover plans. Twitter shareholders have already launched a class action lawsuit. At that time, they accused the Tesla CEO of securities fraud.