May 26, 2022

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Twitter investor sues Elon Musk for not immediately disclosing his shares | Elon Musk

A Twitter contributor is suing Elon Musk For not disclosing that he bought a large stake in the company, which affected stock prices.

Tesla’s CEO revealed on April 4 that it had acquired a 9.2% stake in Twitter. Shares in the social media company soared, as investors viewed the move as a vote of confidence from the world’s richest man.

However, federal trade laws require investors to notify the Securities and Exchange Commission (SEC) after exceeding 5% of a company’s stake within 10 days. Musk acquired his shares on March 14 but did not announce it until April 4.

The new lawsuit alleges that in the period between crossing the 5% threshold and public reporting, Musk was able to purchase additional shares at a discount. experts Appreciation This delay may have illegally earned Musk $156 million.

The lawsuit was filed in New York federal court on Tuesday, and it is seeking class-action status on behalf of investors who sold Twitter shares during that period and lost gains they would have known had Musk disclosed his stake earlier.

After Musk disclosed his stake, Twitter shares rose 27% – from $39.31 to $49.97. The plaintiff in the lawsuit sold 35 shares on Twitter for $1,373, an average price of $39.23, before Musk disclosed his investment..

Jeffrey Block, of the law firm representing the plaintiff, confirmed that the lawsuit had been filed as of Tuesday. The lawsuit seeks a jury trial for unspecified compensatory and punitive damages. Musk did not immediately respond to a request for comment.

The Securities and Exchange Commission did not immediately respond to a request for comment on whether it would take action against Musk.

Musk’s announcement that he had acquired a 9.2% stake – making him the company’s largest shareholder at the time – sparked immediate controversy. Many speculated that the acquisition could allow Musk, an outspoken critic of Twitter, to push the company to make broader changes.

Twitter announced on April 5 that Musk would be joining its board of directors, but on Sunday, Twitter CEO Parag Agrawal suddenly announced that Musk it will not be Join the board after all.

By not joining the board of directors, Musk, a prolific Twitter user, can continue to buy shares without sticking to his agreement with the company to limit his stake to 14.9%. After news of the turn broke, Musk tweeted and then deleted the mouth-filling emoji.

Reuters contributed to this report

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