Elon Musk’s Twitter business hit a snag after a stakeholder filed a class action lawsuit over the management of its $3 billion investment.
Marc Rasella has filed a lawsuit against the tech billionaire, claiming Musk delayed disclosing his stake in the social media juggernaut in order to buy more shares at a lower price.
The shareholder accuses the Tesla boss of violating a deadline to reveal he bought at least a 5% stake until he almost doubled his stake to over 9%.
So let me get this: Elon Musk made $156 million by violating securities law, and he was rewarded with a seat on the Twitter board?
—Robert Reich (@RBReich) April 7, 2022
Under securities law, Musk was required to file the paperwork with the SEC by March 24, 10 days after his 5% purchase.
However, he did not do so until April 4, earning him a potential A$209 million (US$156 million), at the expense of other shareholders who were unable to enjoy the same way.
The lawsuit states, “Investors who sold shares of Twitter between March 24, 2022, when Musk was required to have disclosed his ownership of Twitter, and before the actual disclosure on April 4, 2022, missed the price increase. of the resulting action as the market reacted to Musk’s buying and were damaged as a result.
69.420% of statistics are false
— Elon Musk (@elonmusk) April 9, 2022
Musk’s regulatory filings show he bought just over 620,000 shares on January 31 and continued to accumulate more shares each trading day through April 1.
The lawsuit alleged that on March 14, Musk reached a 5% stake, requiring him to publicly disclose his holdings under US securities law.
After Musk disclosed his investment on April 4, Twitter shares rose 27% as investors saw it as a vote of confidence from the world’s richest person.
Mr Rasella said he sold 35 shares of Twitter for 1,844 Australian dollars (1,373 US dollars) for an average price of 52.69 Australian dollars (39.23 US dollars) between March 25 and 29.
He says the delay in Musk’s disclosure of his investment means sellers have been defrauded by selling at “artificially deflated” prices.
now that everyone is wondering…
yes, we have been working on an editing feature since last year!
no, we didn’t come up with the idea of a poll 😉
we are launching the tests in @TwitterBlue Labs in the coming months to find out what works, what doesn’t and what is possible.
– Twitter Comms (@TwitterComms) April 5, 2022
The lawsuit comes as Musk continues to be outspoken about the changes he wants to make to the company.
Last week, Elon suggested that Twitter should test the commonly requested edit button, with the social media company confirming that it would indeed be rolling out the feature.
Other proposals included making the Twitter Blue service cheaper, banning advertising, and even having the option to pay in cryptocurrency.
He even put up a poll that asked, “Convert Twitter SF HQ into a homeless shelter since nobody shows up anyway?”
The poll garnered more than 1.9 million votes, with 91.3% of voters in favor of the proposal.
Musk may just have to block these changes in the meantime.