Ringo Ho Chiu / AFP
Twitter contributor on Tuesday Foot A securities fraud lawsuit against Elon Musk, alleging that the Tesla CEO’s belated disclosure of his stake in Twitter has cost shareholders money and saved Musk about $143 million.
Mark Penn Rasella has filed the lawsuit and is seeking to represent all investors who sold Twitter stock between March 24 and April 1. Because Musk waited days to announce his purchase of Twitter stock, he lowered the stock price and snatched away others who sold Twitter stock.
Under securities laws, Musk was supposed to alert the Securities and Exchange Commission within 10 days after purchasing 5% or more of Twitter shares.
But Musk didn’t file his papers with the SEC until April 4, or 11 days later, and by that time, Musk had raised more than 9% of the social media company’s stock.
Musk did not respond to a request for comment.
In his lawsuit, Rasella said by not giving federal regulators an alert RThe hat he was devouring On Twitter, Musk was essentially able to buy Twitter shares at a discount.
According to the lawsuit, Musk “made materially false and misleading statements and omissions by failing to disclose to investors that he had acquired a 5% ownership interest in Twitter as required.”
According to the lawsuit, Musk “knew or recklessly ignored” that he was obligated to file the papers with the Securities and Exchange Commission, which estimates that late filings saved Musk about $143 million, or a tiny portion of his fortune. Musk is the richest person in the world.
But while those moves may have been a profit for Mask on paper, Twitter contributors who sold shares during the time period in question were doing so at an artificially low price, the lawsuit says.
Manhattan-based attorney Jeffrey Craig Block wrote, “Plaintiff and Class would not have sold Twitter’s securities at the sold price, or at all, if they had known that market prices had been artificially and erroneously lowered by the misleading statements of the defendant, who represents Rasella.” .
Rasella’s lawsuit seeks unspecified damages.
The lawsuit is the latest drama implicated by Twitter and Musk, who, in a stunning reversal, said he would not be joining Twitter’s board of directors less than a week after publicly declaring he had been offered a seat.
Twitter CEO Parag Agrawal has yet to explain the switch then saying in a tweet that it was “for the better” and that “there will be distractions in the future”.
Musk, who is known for petty content and sometimes trolling on Twitter, sparked the idea of the addition Edit button to Twitter and come up with more outlandish proposals, like turning the company’s San Francisco headquarters into a homeless shelter.