the huge Elon Musk investment in Twitter took a new turn this Tuesday by filing a lawsuit alleging that the billionaire illegally delayed disclosure of his stake in the social media company to be able to buy more shares at lower prices.
The lawsuit filed in a federal court in New York accuses Musk of violating a regulatory deadline to reveal that he had a cumulative stake of at least 5 percent. According to the suit, Musk did not disclose his investment in Twitter until his stake reached more than 9 percent.
That strategy, the suit alleges, hurt less wealthy investors who sold shares of the San Francisco company in the nearly two weeks before Musk declared holding a significant stake.
Musk’s regulatory filings indicate that he bought just over 620,000 shares at $36.83 each on January 31 and then it continued to accumulate more shares almost every trading day until April 1.
Musk, best known for being the CEO of Tesla, owned 73.1 million shares of Twitter at the most recent count on Monday. This represents a 9.1 percent share of the social network.
The lawsuit alleges that on March 14, Musk’s share of Twitter had reached the 5 percent limit which required him to publicly disclose his holdings under US securities law by March 24. Musk did not release the required information until April 4.
This revelation sent shares of Twitter soaring 27 percent from its close on April 1 to almost $50 at the end of trading on April 4, depriving investors who sold shares before the reveal of the revelation. potential for significant profit, according to the lawsuit filed on behalf of an investor named Marc Bain Rasella. Musk, for his part, was able to continue buying shares that traded at prices ranging from $37.69 to $40.96.
The lawsuit asks to be certified as a class action representing Twitter shareholders who sold shares between March 24 and April 4, a process that could take a year or more.
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Is Musk ‘seeing them black’? They accuse him of violating the law in the purchase of Twitter shares