Tesla CEO made “materially false and misleading statements and omissions”, claim shareholders.
Tesla CEO made “materially false and misleading statements and omissions”, claim shareholders.
Tesla CEO Elon Musk was sued Tuesday, April 12, 2022, by former Twitter Inc. shareholders who claim they missed out on the recent run-up in its stock price because they lost 9.2% in the social media company. Waited too long to disclose stake. ,
In a proposed class action filed in Manhattan federal court, shareholders said Musk, the chief executive of electric car company Tesla Inc., made “materially false and misleading statements and omissions” by failing to invest in Twitter by March 24. . as required by federal law.
Twitter shares rose 27% from $39.31 to $49.97 on April 4, after Mr. Musk disclosed his stake, in what investors saw as the San Francisco-based Twitter vote of the world’s richest man.
Former shareholders led by Mark Russella said the delayed disclosure allowed Musk to buy more Twitter shares at lower prices, while tricking them into selling them at “artificially deflated” prices.
The lawsuit seeks unspecified compensatory and punitive damages.
Mr Musk’s lawyer did not immediately comment. Tesla is not a defendant.
US law
US securities law requires investors to disclose within 10 days when they have acquired 5% of a company, which in Mr. Musk’s case would be March 24.
Twitter announced on 5 April that Mr. Musk will join its board of directorsBut this week it said they have decided not to.
By not joining the board, Mr Musk, a prolific Twitter user, can continue to buy shares without being bound by his agreement to limit his stake with the company to 14.9%.
Some analysts have suggested that Mr. Musk may pressure Twitter to make changes, or even make an unsolicited bid for the company.
Mr. Russell said he sold 35 shares of Twitter between March 25 and 29 for $1,373 or an average of $39.23. Mr. Musk is worth $265.1 billion. Forbes magazine.