A Twitter shareholder has filed a class action lawsuit against billionaire Elon Musk over the handling of his recent Twitter investment. The main reason for this appeal is the 11-day delay in officially reporting said investment to the Securities and Exchange Commission (SEC). A delay which, according to the lawsuit, would have allowed Elon Musk to enrich himself compared to other investors.
As a reminder, Elon Musk has only been the main shareholder of Twitter for a few weeks and now he is already associated with stories of legal action. The multiple clashes between Musk and the SEC as well as securities law have resulted in Musk filing about it with the SEC.
He was required to do so by March 24, but he did not do it until April 4. Meanwhile, his stake in Twitter has risen to 5%. And the problem is that the other investors did not benefit from the same privileges as him.
Elon Musk allegedly made misleading claims
Apparently, according to the lawsuit, the delay would have earned Musk a sum in the vicinity of 156 million dollars (144,144,000 euros approximately). The 11-day delay may have influenced earnings for Twitter investors as the current market reacted to Musk’s recent stock purchases. However, any investor who sold shares of Twitter between March 24 and April 4 did not have the chance to reap the same profit as it did when the values rose.
As a result of Musk’s actions, the shareholder who made the lawsuit and other investors sold some of their shares at prices ” artificially deflated “. But the lawsuit also points to materially false and misleading statements and omissions by Musk in failing to disclose to investors the acquisition of a 5% stake in Twitter as required.
A lawsuit that comes at the wrong time
The least we can say is that this lawsuit comes at a bad time for Elon Musk and Twitter. Earlier this month, it was concluded that not only will Elon Musk buy a sizable stake in Twitter, but he will also have a seat on the company’s board. A decision that drew a lot of criticism.
But the Twitter CEO rectified his decision in an email he attributed to his employees. He said it was best that Elon Musk did not take the board member position.