A Twitter investor claims Elon Musk has gained millions of dollars by ‘deflating’ Twitter share prices through delayed disclosure
Twitter investor, Marc Rasella, has accused the SpaceX founder and the world’s richest man, Elon Musk of making him lose money through “misleading statements”About his Tuesday purchase of large shares in Twitter
According to the plaintiff who is seeking class status in his case for behalf of Twitter investors who purchased stock from them between February and April 2013, he claims that if he had not sold his shares, a jury would have awarded him the right to sue. “artificially deflated prices”Musk could have had his private purchase made public earlier than required by US federal laws on trade.
Any investor who holds more than 5% of a company’s stock must notify the Securities and Exchange Commission within 10 days. The lawsuit claims that Musk exceeded this threshold on March 14, and must have notified the SEC by March 24, but he did not notify the SEC until April 4. He then stated in an SEC filing that he purchased 9.2% Twitter shares.
Twitter shares rose 27% from $39.31, to $49.97 after the news. They also surpassed $50 at one point. According to the plaintiff, he sold 35 Twitter share for $1,373, an average price $39.23 after Musk bought his stake, but before the announcement. This was all while Musk was still allegedly buying shares. “deflated” prices.
According to this lawsuit, SpaceX’s CEO claimed that he saved $143 Million due to the delaying SEC filing. However, some US media reported that it was $156 million.
“Plaintiff and the Class would not have sold Twitter’s securities at the price sold, or at all, if they had been aware that the market prices had been artificially and falsely deflated by Defendant’s misleading statements,”The lawsuit says. The lawsuit seeks a jury trial to determine unspecified punitive or compensatory damages.
Musk, who has recently been revealed by Forbes as the world’s richest man after overtaking Amazon’s Jeff Bezos, has not commented on the lawsuit. Twitter and the SEC did not comment on it.
An active Twitter user with over 81.5 million followers, Musk has become the social media company’s largest shareholder with his 9.2% stake. Twitter had announced on April 5 that Musk would join the board. However, Musk later retracted his claim.
Parag Agrawal was the Twitter CEO and made the most recent announcement. He did not provide any explanation for why Musk refused the offer. Joining the board would have prevented Musk from owing more than 14.9% of Twitter’s common stock.
The news about Musk not joining the Twitter board saw the company’s shares drop 5% in a pre-market session on Monday.