Elon Musk sued by Twitter shareholder, alleging that he manipulated the company's stock price with his tweets following the buyout agreement
Elon Muskfor market manipulation for his tweets about the buy being "on hold."
- The complaint was filed in California on Wednesday.
A Twitter shareholder is suing Elon Musk and Twitter over Musk's tweets following his agreement to buy the company last month.
The proposed class-action suit, filed in a federal district court in San Francisco on Wednesday, alleges that Musk manipulated the value of the social media company via his tweets, which hurt investors and employees.
The suit focuses mainly on Musk's tweet earlier this month that the deal was "on hold" until he could be sure that Twitter's reported figure that fewer than 5% of the the platform's accounts comprised spam bots is accurate.
"Musk's tweet (and public statement) was misleading and constituted an effort to manipulate the market for Twitter shares as he knew all about the fake accounts," the complaint says.
The complaint argues that Musk used tweets about spam bots to lower Twitter's stock price so he could renegotiate the price of the deal.
"Musk's market manipulation worked -- Twitter has lost $8 billion in valuation since the buyout was announced," the complaint says.
Twitter shares have fallen more than 19% to below $40 from where they traded the day before Musk announced a deal to take the company private in a buyout worth $54.20 a share.
Twitter didn't immediately respond for comment, but via email Musk replied:
"Just because your name is Business Insider Trading doesn't mean you should project that on others!"
The complaint further argues that Musk made his tweets and public comments to help ease the pressure from a planned loan backed by his Tesla equity that was originally meant to add to financing the Twitter deal, which he dropped this week, the WSJ reported.
Tyson Redenbarger, partner at Cotchett, Pitre & McCarthy, one of the plaintiff's lawyers on the case, described the complaint as "as simple as it sounds." The California statute the complaint cited prohibits market manipulation, and "what we allege in the complaint is it's clear this is exactly what has happened," he added.
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