JAKARTA - Elon Musk, was sued by former Twitter Inc shareholder, on Tuesday, April 12. They claim to have missed the recent stock price hike because they waited too long for Musk's stance to reveal his 9.2% stake in the social media company.
In a class-action lawsuit filed in Manhattan federal court, shareholders said Musk, CEO of Tesla Inc, made "false and misleading statements and omissions" by not disclosing that he had invested in Twitter by March 24, as required by federal law.
Twitter shares rose 27% on April 4, to $49.97 from 39.31, after Musk disclosed his stake, which investors see as a vote of confidence from the world's richest person on San Francisco-based Twitter. .
Former shareholders led by Marc Rasella said the delayed disclosure allowed Musk to buy more Twitter stock at a lower price, while tricking them into selling at an "artificially deflated" price.
The lawsuit seeks damages and penalties for Musk, but the amount has not been determined. An attorney for Musk declined to comment on this. In this case, Tesla is not the defendant.
US securities laws require investors to disclose within 10 days when they have acquired 5% of a company's stock, which in Musk's case was March 24.
Twitter announced on April 5 that Musk would be joining its board of directors, but this week he decided against joining.
By not joining the board, Musk, a prolific Twitter user, can continue to buy shares without being bound by his agreement with the company to limit his ownership to 14.9%.
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Some analysts have suggested Musk could push Twitter to make changes, or even pursue an unsolicited bid for the company.
Rasella said he sold 35 Twitter shares for $1,373, or an average price of $39.23, between March 25 and 29. Musk alone has a net worth of $265.1 billion, according to Forbes magazine.
The case between Rasella vs Musk, will be heard in US District Court, Southern District of New York, with No. 22-03026.
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