Elon Musk is suing for a delay in disclosing his Twitter stake
Elon Musk is suing for a delay in disclosing his Twitter stake
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Former Twitter Inc shareholders sued Elon Musk on Tuesday, claiming they missed out on the recent run-up in the company’s stock price because Musk delayed too long to declare a 9.2 percent interest in the social media business.

The shareholders said in a proposed class action filed in federal court in Manhattan that Musk, the CEO of electric vehicle firm Tesla Inc, made “materially false and misleading representations and omissions” by failing to disclose his investment in Twitter by March 24, as required by federal law.

On April 4, Twitter shares soared 27 percent to $49.97 from $39.31 after Musk declared his position, which investors saw as a vote of confidence in San Francisco-based Twitter from the world’s richest person.

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Former shareholders led by Marc Rasella claimed that the delayed disclosure allowed Musk to buy more Twitter shares at lower prices while tricking them into selling at “artificially deflated” prices.

The lawsuit seeks specific compensatory and punitive damages.

Musk’s counsel did not respond immediately. Tesla is not a defendant.

U.S. securities law requires investors to declare within 10 days of acquiring 5% of a company, which in Musk’s case would have been March 24.

Musk was supposed to join Twitter’s board of directors on April 5, but he decided not to do so this week.

Musk, a frequent Twitter user, can continue to buy shares without being obliged by his agreement with the firm to limit his holding to 14.9 percent if he does not join the board.

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According to some analysts, Musk may press Twitter to make reforms or even launch an unsolicited bid for the firm.

Rasella stated that between March 25 and March 29, he sold 35 Twitter shares for $1,373, or an average price of $39.23. Forbes magazine estimates Musk’s net worth at $265.1 billion.

Rasella v Musk is a case filed in the United States District Court for the Southern District of New York with the case number 22-03026.