Musk’s huge Twitter investment took a new turn on Tuesday when a lawsuit was filed that said the billionaire illegally hid his stake in the social media company so that he could buy more shares at a better price.
Musk is sue in federal court in New York for not telling regulators that he had at least 5% of the company. Complaint: Instead, the complaint says that Musk didn’t tell anyone about his stake in Twitter until he had almost doubled his stake to more than 9 per cent of Twitter.
Less well-off people sold their shares in the San Francisco company nearly two weeks before CEO Elon Musk said he had a big stake in the company, the lawsuit says.
Musk’s regulatory filings show that he bought a little more than 620,000 shares at USD 36.83 each on Jan. 31. He then bought more shares almost every day through April 1.
Musk, who is best known as the CEO of electric car company Tesla, had 73.1 million Twitter shares. That means Twitter has a 9.1% stake in the company now, which is a lot.
The lawsuit says that by March 14, Tesla CEO Elon Musk had a stake in Twitter that was more than 5%, which meant he had to make his stock holdings public by March 24. Musk didn’t say what he had to until April 4.
People who sold shares before Musk’s delay caused Twitter’s stock to rise 27% from its close on April 1 to almost 50 cents by April 4, a lawsuit filed on behalf of an investor named Marc Bain Rasella says. On the other hand, Musk was still able to buy shares at prices ranging from $37.69 to $40.96.
The lawsuit wants to be a class action for Twitter shareholders who sold their shares between March 24 and April 4. This could take a year or more.
Musk spent about $2.6 billion on Twitter stock, only a small part of his estimated wealth of $265 billion, the world’s largest individual fortune.
In a regulatory filing Monday, Musk said that he might buy more of Twitter after he backed out of a deal to join the company’s board of directors last week, but he didn’t say how much.
Lawyer Jacob Walker told the AP that he hasn’t talked to the Securities and Exchange Commission about how Musk hid his Twitter stake from the public. ? the SEC likely knows what he did. An SEC spokesperson refused to say anything.
The SEC and Musk have been fighting in court since 2018, when Musk and Tesla agreed to pay a USD 40 million fine to settle claims that he used his Twitter account to mislead investors about a possible buyout of the electric car company that never happened. The SEC and Musk have been fighting in court since 2018.
Musk suppose to get legal permission before tweeting about things that could hurt Tesla’s stock price, which regulators say he has sometimes broken and that he now says is unfairly stifling him.
Musk didn’t answer right away when someone asked him for a comment on Twitter, where he often talks about his feelings and opinions. Alex Spiro, a New York lawyer for Tesla CEO Elon Musk, didn’t immediately answer a question about this.