Just a few days after becoming a shareholder in Twitter, Elon Musk is facing a class-action lawsuit over his handling of the investment, by another shareholder.
The lawsuit comes after the SpaceX CEO and founder failed to officially disclose his investment in Twitter to the SEC after 11-days.
As per securities law, Musk was required to file paperwork with the SEC by 24th March or 10 days after his stake grew to 5%. However, he did so on the 4th of April. The insignificant delay may end up costing the 50-year-old $156 million.
The lawsuit states:
Investors who sold shares of Twitter stock between March 24, 2022, when Musk was required to have disclosed his Twitter ownership, and before the actual April 4, 2022 disclosure, missed the resulting share price increase as the market reacted to Musk’s purchases and were damaged thereby.
The shareholder who brought the suit stated that he and other investors sold shares at ‘artificially deflated’ prices due to Musk’s actions.
The suit also accuses the CEO of making “materially false and misleading statements and omissions by failing to disclose to investors that he had acquired a 5% ownership stake in Twitter as required.”
The lawsuit comes only days after the Tesla Motors founder had decided to join the Twitter Board of Directors. However, the decision was abruptly reversed after a series of tweets from Musk asking his followers’ opinions on the changes they wanted to see in the company.
Twitter CEO, Parag Agrawal claimed that Musk would have been a “fiduciary of the company, where he like all board members has to act in the best interest of the company and all our shareholders.” He added that it was “for the best” that Musk would not take the position.
