Elon Musk Sued for Waiting Too Long to Disclose 9.2% Twitter Stake
Elon Musk faces a federal lawsuit from Twitter shareholders alleging they missed out on significant profits when the Tesla CEO failed to properly disclose his substantial stake in the social network.
In a proposed class-action claim filed in Manhattan federal court, plaintiff Marc Bain Rasella claims that investors who sold shares of Twitter stock between when Musk was required to disclose his ownership stake (March 24) and when he actually did (April 4) were "damaged" by missing out on the 27% share price increase.
"Defendant had the obligation, ability, and opportunity to prevent the issuance of the false statements and omissions alleged herein," the proposed class action suit said. "Because of his position as a 5% owner in Twitter, and access to material non-public information available to himself but not to the public, Defendant Musk knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the omissions being made were false and misleading."
According to the complaint, entrepreneur and business magnate Musk began acquiring Twitter shares in January. By March 14, he'd secured more than a 5% ownership stake in the company, at which point he was required to file with the Securities and Exchange Commission (SEC) within 10 days.
Instead, Musk continued amassing ownership, eventually acquiring a 9.1% stake in the company before filing on April 4, when his announcement drove stocks up more than $10 per share.
"By failing to disclose his ownership stake […] Musk was able to acquire shares of Twitter less expensively," the filing said. As a result, "Musk made materially false and misleading statements by failing to disclose to investors that he had acquired a 5%
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