Investors accuse Musk of benefiting financially by delaying the disclosure of an initial 5 per cent stake in Twitter, which he had acquired by 14 March 2022
Investors launched a lawsuit against Elon Musk and Twitter over the handling of a proposed takeover of the social media company, accusing the billionaire of violating corporate laws, market manipulation and wrongful conduct.
In a proposed class-action lawsuit filed in the US, Twitter investor William Heresniak led the complaint on behalf of himself and others similarly situated.
The suit filed accuses Musk of creating “chaos” at Twitter, after the billionaire launched a $44 billion hostile takeover bid in late April.
Twitter was also named as a defendant, with the investors arguing it had an obligation to investigate Musk’s moves, although it is unlikely the company will be on the hook for any damages.
Investors accuse Musk of benefiting financially by delaying the disclosure of an initial 5 per cent stake in Twitter, which he had acquired by 14 March 2022. He then continued to buy stock, revealing in early April he had built a 9.2 per cent holding in the company.
By doing this, investors assert Musk engaged in market manipulation “and bought Twitter stock at an artificially low price”, potentially saving $156 million.
Furthermore, the investors accused Musk of making false statements, particularly through Tweets which were “misleading”.
The Tesla boss has 95 million followers on the platform and is a regular user.
The lawsuit included a tweet from Musk which stated his proposed takeover was on hold due to concerns over the number of fake accounts on Twitter, as well as criticism of the current leadership
This move “constituted an effort to manipulate the market for Twitter shares as he knew about the fake accounts”, read the filing.
A recent drop in Tesla stock has put his Twitter financing in “major peril”, warned the investors, as Musk pledged shares in the automaker as collateral to secure loans he needs to buy the company.