Elon Musk Asks Court To Reject Twitter's Shareholders' Lawsuit, Here's The Reason

Elon Musk wants to drop the lawsuit by former Twitter shareholders (photo: x @DimaZeniuk)

JAKARTA - Elon Musk wants to drop the lawsuit by former Twitter shareholders who say he was late in revealing his share ownership in the social media company in early 2022. In a filing to Manhattan federal court on Wednesday evening, July 3, Musk stated that "all indications" suggest his delay was a mistake.

In the filing, Musk called it unreasonable to believe he intended to deceive shareholders who didn't know he had taken 9.2% stake on Twitter and lost big profits as they sold their own shares.

Investors in the proposed class action lawsuit say Musk and his wealth manager Jared Birchall know that US Securities and Exchange Commission (SEC) rules require Musk to reveal that he has purchased 5% of Twitter shares by March 24, 2022, but he is waiting 11 more days.

Investors say that this allows Musk to buy more stocks at low prices, saving more than $200 million. Twitter shares, now known as X, rose 27% on April 4, 2022 after Musk revealed his 9.2% stake.

Musk, who is the richest person in the world according to Forbes magazine and runs other companies including electric car maker Tesla, said in the filing that he intends to disclose his Twitter shareholdings by the end of 2022, but immediately revealed it after realizing that he misunderstood the SEC's disclosure rules. "This is not a fraudulent scheme," Musk said. "All indications" include those in the complaint "showing error."

Musk also denied investor claims that unnamed banker Morgan Stanley helped design a trading strategy to raise Twitter shares without telling the wider market. Lawyers for investors, led by Oklahoma's public pension fund, made no comment on Friday.

Musk finally bought San Francisco-based Twitter for $44 billion in October 2022. The SEC has also investigated its Twitter share purchases.

In September last year, US District Judge Andrew Carter refused to abort the previous version of the lawsuit. He found evidence that Musk understood the SEC's disclosure and testified about it under oath.