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Elon Musk sued by Twitter shareholders. The Tesla and SpaceX chief is being sued in a federal securities class-action lawsuit by a Twitter investor who claims he should’ve revealed his 5% stake in the company when required to do so. The plaintiff alleges that Elon Musk’s delay allowed him to buy more shares of Twitter at a lower price, depriving holders of greater earnings.
As per the complaint, Musk disclosed information about his shares when they were just under 10 percent. The civil suit filed in Manhattan federal court by Marc Bain Rasella on behalf of “all investors who sold or otherwise disposed of Twitter, Inc. securities between March 24, 2022, and April 1, 2022, inclusive” charged him with making “materially false and misleading statements and omissions” by failing to disclose his investment on March 24th as required by law.
Elon Musk sued by Twitter shareholders, but why?
The Securities and Exchange Commission (SEC) has a deadline of 10 days to file a Schedule 13 after reaching the 5% mark.
According to the eccentric billionaire’s regulatory filings, he bought around 620,000 shares at $36.83 on January 31st and bought them ’til April 1st. The lawsuit claims that when he revealed his ownership stake on April 1st, the company’s shares rose from $39.91 to $49.97 in three days, a gain of around 27 percent. By keeping his increasing ownership in the company silent, the plaintiff alleges that he was able to artificially suppress the stock’s price and acquire it at a lower price.
There was talk of Musk taking a seat on the company’s board, but the current CEO Parag Agrawal has reversed that decision earlier this week after seeing his tweets where he was lad-posting and asking if the letter ‘w’ should be dropped from the company’s name or if the headquarters should be converted to a homeless shelter.
As of this Monday’s update, the meme-aficionado has a 9.2 percent stake with 73.1 million shares.
Top 5 Twitter stakeholders
- Elon Musk with 9.2%
- The Vanguard Group, Inc with 8.8%
- Morgan Stanley with 8.4%
- Blackrock Inc with 6.5%
- State Street Corp. with 4.5%