Elon Musk was sued over delaying the disclosure of his newly purchased stake in Twitter, a move they alleged has kept the company’s share price down and saved Musk around $143 million.
Former Twitter shareholders led by Marc Bain Rasella filed the lawsuit against Musk, accusing the Tesla CEO of making “materially false and misleading statements and omissions” by not declaring his purchase to the Securities and Exchange Commission (SEC) within the required timeframe.
Musk bought a 9.2 percent stake in Twitter on March 14 and submitted a regulatory filing for the purchase on April 4, meaning he submitted his filing 10 days late.
Under federal law, Musk was supposed to alert the SEC on or before March 24, 10 days after purchasing at least 5 percent of Twitter’s stock.
Rasella said the delayed filing had kept Twitter’s share prices down, allowing Musk to buy more shares for cheap and selling them at “artificially deflated” prices.
Twitter’s share price jumped more than 27 percent after news broke on April 4 that Musk has become the company’s largest shareholder.
The social media company announced on April 5 that Musk would join its board of directors, but Musk earlier this week said he decided not to. Not joining the board will allow Musk to keep buying Twitter shares without being bound to limit his stake to 14.9 percent.
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