Elon Musk is in trouble over his recent investment in Twitter.
According to a SEC filing, a Twitter investor filed a class action lawsuit against Musk, alleging that he was late to disclose his recent purchase of Twitter shares. This in turn caused damage to other investors, who missed out on potential gains after Twitter stock price surged on the news of the world’s richest man buying it.
“Defendant Musk, because of his position as a 5 percent owner in Twitter, had an obligation to file a Schedule 13 with the SEC,” the lawsuit states. “Musk was required to file a Schedule 13 with the SEC within ten days of passing the 5 percent ownership threshold in Twitter, i.e., on March 24, 2022. Musk did not file a Schedule 13 with the SEC within the required time and instead continued to amass Twitter shares, eventually acquiring a 9.1 percent stake in the Company before finally filing a Schedule 13 on April 4, 2022.”
The lawsuit further claims that Musk had a motive to file the Schedule 13 late, as this enabled him to purchase further shares of Twitter at a lower price.
Musk’s Twitter adventure (publicly) started on March 25, when he launched a Twitter poll asking followers whether Twitter “rigorously adheres” to the principle that “free speech is essential to a functional democracy.” Musk further suggested that some changes might be happening at Twitter soon.
A few days later, it became clear that he’d been purchasing Twitter shares and that he’d become the company’s largest individual shareholder. Soon after, Twitter announced Musk would be joining the company’s Board of directors (which, notably, would forbid him from buying more than 14.9 percent of Twitter stock), but the appointment never materialized, though Musk continued to suggest changes at Twitter as if he ran the company.
