Elon Musk sued by Twitter investors for delaying disclosure of stake
Elon Musk has been sued by Twitter shareholders, led by Virginia resident William Heresniak, for failing to disclose his purchase of Twitter stock within the required deadline. His purchase is also currently under investigation by the SEC separately.
First reported by Reuters, the lawsuit claims that Musk saved himself $156 million by failing to disclose that he had purchased more than 5 percent of Twitter by March 14. The argument is that if the general public knew Musk was purchasing stock, it would have been more attractive and would have been more expensive for Musk to buy the remaining shares before he did finally disclose his 9 percent ownership in April.
"By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price," read the investors' lawsuit.
The lawsuit also touched upon Musk's ability to leverage his Tesla stock to purchase Twitter, with the price down more than 25 percent since an early April high of over $1,000 per share. The stock closed at $713 on Thursday afternoon.
The SEC rules require that any purchase of a company beyond 5 percent needs to be disclosed within 10 days.
(The copy was updated with the company's name in first paragraph)
Edited by Megha Reddy