Elon Musk was sued by a Twitter shareholder who alleged he disclosed his stake in the social-media company too late
- The lawsuit alleges that the Tesla CEO's delay in disclosing his Twitter stake to the SEC stunted Twitter's share price.
A Twitter shareholder has sued Elon Musk, alleging that by not disclosing his stake in the social media company soon enough, the Tesla CEO kept Twitter's share price down.
The lawsuit was filed in Manhattan federal court on Tuesday by Marc Bain Rasella, Bloomberg first reported. The suit alleges that Musk was required to disclose his stake in Twitter by March 24, but he did not until April 4. When Musk disclosed his stake in Twitter, the company's share price shot up 27%.
According to Rasella, Musk had 10 days to notify the Securities and Exchange Commission of his stake after it surpassed the 5% threshold on March 14. Investors who sold Twitter stock between March 24 and April 4 lost out on gains they would have realized had Musk disclosed his stake earlier, the lawsuit argues. By delaying his disclosure, Musk was able to continue buying shares of Twitter at a reduced price, Rasella said.
Rasella aims to represent a class of investors who disposed of Twitter shares between March 24 and April 1.
Musk and Twitter did not immediately return requests for comment.
The lawsuit is the latest development in a dramatic saga that has unfolded since Musk went public about his 9.1% stake in Twitter, a platform on which he has more than 80 million followers.
The investment makes Musk the company's largest individual shareholder, and he said he looked forward to enacting significant changes as a member of the company's board of directors. But in a major reversal, Twitter CEO Parag Agrawal said on Sunday that Musk would not be joining the board after all.
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