Elon Musk, the founder of Tesla, has been sued by Twitter investors for manipulating the share price of the social network before the takeover bid. Thus, they accuse him of delaying the disclosure of his participation in the social platform and manipulating the market. The lawsuit was filed late Wednesday in federal court in California.
Investors said Musk saved $156 million by not disclosing that he had bought more than 5% of Twitter before March 14, according to the report. New York Postt. The tycoon continued to buy shares afterwards, finally revealing on April 4 that he owned 9.2% of the company.
“By delaying the disclosure of his Twitter holding, Musk manipulated the market and bought Twitter stock at an artificially low price,” said the investors, led by Virginia-based William Heresniak.
Earlier this month, the Wall Street Journal reported that the US Securities and Exchange Commission (SEC) was investigating the delay in Musk’s disclosure. The billionaire businessman has not yet publicly explained why he did not file the SEC application in a timely manner.
It is not the first lawsuit that the tycoon has faced. On May 6, Musk himself and Twitter were sued by a Florida pension fund that seeks to prevent the founder of Tesla from completing the acquisition of the social network before 2025.. In its lawsuit, filed in Delaware Chancery Court, the Orlando police pension fund said Delaware law prohibits a quick buyout because Musk had deals with other big Twitter shareholders, including his financial adviser Morgan Stanley and the founder of the social network Jack Dorsey, to support the purchase.
The fund said those deals made Musk, who owns 9.6% of Twitter, the beneficial “owner” of more than 15% of the company’s shares. And he said the takeover needed to be delayed for three years unless two-thirds of the shares he didn’t own gave their approval.
The new lawsuit also accuses Musk of knowingly making statements that have manipulated the market, such as his claim that The operation was stopped until more information was known about the false accounts on the social network, which caused a 9.8% drop in the platform’s shares. In his opinion, which coincides with that of many analysts, it was a maneuver by the tycoon to lower the price of the social network, after having offered 54.2 dollars per share of the social media company, and after seeing how shares of Tesla, which Musk himself had linked to the operation, plummeted.
According to the suit, “Musk’s market manipulation has worked. Twitter has lost $8 billion in valuation since the purchase was announced.”
This new legal conflict occurs on the same day that Musk notified the SEC that he will raise his own funds from 21,000 to 33,500 million dollars. (be his pocket or third-party partners) to carry out the purchase of Twitter for 44,000 million dollars. The rest will be covered by a loan guaranteed by the assets of the social network itself. A movement with which the billionaire businessman eliminates the tranche of the financing of the operation that had his own Tesla shares as collateral and that had acted as a drag on the evolution of the automobile company on the Stock Market.
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Twitter investors sue Elon Musk for manipulating the social network’s share price