Elon Musk is being sued by a Twitter shareholder for failing to disclose that he had purchased a large number of the company’s shares.
Elon Musk, the CEO of Tesla, said on April 4 that he had purchased a 9.2 percent interest in Twitter. This was seen as a vote of confidence from the world’s wealthiest individual, and the social media company’s stock price surged as a result.
If an investor owns more than 5% of a corporation, the Securities and Exchange Commission (SEC) must be notified within 10 days. Musk purchased stock in the firm on March 14, but he didn’t announce it until April 4.
Musk was able to acquire additional shares at a cheaper price while waiting to inform the public that he had crossed the 5% barrier, according to the latest lawsuit. According to experts, Musk may have lost $156 million due to delays.
The lawsuit is sought by investors who sold Twitter shares during that period and lost out on gains that would have been achieved if Musk had announced his position earlier.
After Musk confirmed his stake in Twitter, the company’s stock price rose 27%, from $39.31 to $49.97. The plaintiff in the action sold 35 Twitter shares for $1,373, or an average price of $39.23, before Musk announced his interest in the company.
According to Jeffrey Block of the plaintiff’s law firm, the claim was filed on Tuesday. It is hoped that a jury trial will be held for an undetermined amount of compensation and punitive damages. He didn’t respond immediately to a request for comment.
The Securities and Exchange Commission (SEC) did not immediately respond to a request for comment on whether it plans to take action against Tesla CEO Elon Musk.
He said that he had acquired 9.2% of the business, making him its largest stakeholder at this time. His admission prompted controversy. For many, the acquisition of the company by Musk, an ardent critic of Twitter, was a way for him to have greater influence over Twitter’s course of action.
Musk was set to join Twitter’s board of directors on April 5, but on Sunday, Twitter’s CEO, Parag Agrawal, abruptly disclosed that Musk would not be joining the board after all.
If he doesn’t join the board, Musk, who is known for his frequent use of Twitter, may keep buying shares without being restricted by his agreement with the company to limit his holdings to 14.9%. When word of Musk’s reversal spread, he quickly removed a hand-over-mouth emoji from his Twitter account.
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