Apr 13, 2022 1:10 p.m
Musk has allegedly failed to disclose his stake in Twitter to buy more shares at a low price. He would have had to register the purchase of more than five percent of the total shares with the US authorities by March 24, but only did so afterwards.
Twitter shareholder Marc Bain Rasella has sued Tesla CEO Elon Musk for delaying in announcing the purchase of shares in Twitter. This reported the Bloomberg newspaper. The securities fraud lawsuit was filed in a Manhattan court. Rasella represents a group of investors who sold Twitter shares between March 24th and April 1st.
The lawsuit states that Musk had until March 24 to disclose his assets to the US Securities and Exchange Commission (SEC). Rasella claims that the delay in providing the data helped the businessman buy more shares at “artificially low prices.” When Musk provided the data and reported ownership of a stake in the social network, the company’s shares rose 27 percent from $39.31 to $49.97.
Musk has not yet responded to a request from the newspaper. Twitter also declined to comment on the information.
The fact that Musk bought 9.2 percent of Twitter stock, becoming the largest single shareholder, was revealed in an April 4 report by the U.S. Securities and Exchange Commission (SEC). Bloomberg estimates that Musk’s stake could have been worth $2.89 billion as of April 1 close.
As the Washington Post wrote, citing SEC data, Musk’s stake in Twitter had already reached 5 percent as of March 14. Under US law, investors must notify the Commission within ten days of acquiring such an interest in a company. However, Musk didn’t announce his acquisition until April 4. According to experts, the delayed brought in the Tesla CEO around 156 million US dollars (144 million euros).
In a statement, the SEC said the businessman will serve on Twitter’s board of directors for two years until the 2024 annual meeting. However, Twitter CEO Parag Agrawal later explained that Musk chose not to join the board.
At the end of March, Musk wrote to a Twitter user that he was seriously considering starting a new social network. The businessman likened Twitter to a marketplace where people voice their opinions. Against this background, according to the entrepreneur, “failure to respect the principles of freedom of expression fundamentally undermines democracy”. Musk asked users if they were interested in a new platform.
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