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Elon Musk being sued by Twitter shareholder for delaying disclosure of his stake in social media giant

April 13, 2022 | | Print Article

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In a stunning new development in Elon Musk’s involvement with Twitter, an investor has filed a lawsuit against the outspoken billionaire accusing him of illegally delaying his disclosure of his stake in the social media giant in order to keep stock prices low so that he could acquire more shares at a lower cost.

The lawsuit which was filed on Tuesday in a Manhattan federal court alleges that the Tesla and SpaceX CEO violated a regulatory deadline to disclose that he owned a stake of more than 5 percent in the company and that Musk waited until he had amassed more than 9 percent, causing harm to less wealthy investors.

According to the class-action lawsuit by plaintiff Marc Bain Rasella, “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% stake in the Company before finally filing a Schedule 13 on April 4, 2022.”

Musk was required to report that he had exceeded the 5 percent threshold within 10 days according to Securities and Exchange Commission rules but failed to meet the deadline while continuing to buy up shares in Twitter.

“When Musk finally filed the required Schedule 13, thereby revealing his ownership stake in Twitter, the Company’s shares rose from a closing price of $39.31 per share on April 1, 2022, to close at $49.97 per share on April 4, 2022 – an increase of approximately 27%.,” the document filed in the Southern District of New York reads. “Investors who sold shares of Twitter stock between March 24, 2022, when Musk was required to have disclosed his Twitter ownership, and before the actual April 4, 2022 disclosure, missed the resulting share price increase as the market reacted to Musk’s purchases and were damaged thereby.”

“The lawsuit Defendant Musk knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the omissions being made were false and misleading,” the lawsuit states. “Defendant Musk is liable for the false statements pleaded herein.”

The suit comes days after Musk declined to join Twitter’s board, an invitation that reportedly had a condition limiting him from owning more than 14.9 percent of company stock, the news was announced by Parag Agrawal, the CEO of the San-Francisco-based company.

Musk’s rejection of a seat on the board led to speculation that he could be intending to acquire an even greater share in Twitter to increase his influence to force changes at the company which he has been critical of for its censorship.

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” he tweeted in March. “What should be done?”

Prior to the announcement that he would not be accepting a seat on the board, Musk sent out a series of provocative, since-deleted tweets asking “Is Twitter dying?” and polling users on whether the corporation’s San Francisco headquarters should be converted into a homeless shelter and whether the “w” in Twitter should be deleted. He also suggested that anyone who signs up for the enhanced version of Twitter should be given an authentication check and mused about ending advertising.

“And no ads. The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive,” Musk wrote in the deleted tweet.

Multiple media outlets that published stories on the lawsuit state that Musk has not responded to inquiries for his comments nor has he posted any response to the complaint on Twitter.

According to NBC News, “Twitter declined to comment on the suit.”

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28 thoughts on “Elon Musk being sued by Twitter shareholder for delaying disclosure of his stake in social media giant”

  1. Twitter shareholder should be scared but not of Elan Musk, scared of the Twitter Management and Staff that are driving the company into the ground! If they were all out of work tomorrow I would have no compassion.

  3. Suing a man worth 200 BILLION dollars and legions of the best lawyers will probably not end well for you-LOL

  5. I’ve wondered about this too . But the rules are pretty cut & dried . I doubt Musk would make such an error .

  6. I’ll bet the lawsuit is being paid for by Big Tech execs!

    BPR’s new format SUCKS!!!! Stop the F macro that brings up “comedy clubs”, notify us of comments to our comments, and get your heads out of your a$$es!!!!!

  7. Awwwww poor guy is trying to make money off of Elon Musk name to increase the value of his stock. he should have to pay Musk a percentage of his stock value, I hope Musk buys out everyone and becomes the Major share holder and fires everyone on that disgusting site.

  8. Nancy Pelosi bought Tesla stocks with insider trading, on a government salary. I hope this lawsuit costs this person a lot of money and has to sell his Twitter shares.

    1. Yep. As a twitter investor this guy wasn’t paying attention to increased volume or just chose to take advantage of the increased volume and increasing price to unload a losing trade. Anyone that trades has unloaded at the wrong time. Run out of patients.
      Snooozze You Looozze! really does tell the story.

  12. And the plot thickens…..Elon is just having fun with these twits…..no pun intended

  14. Looks like the Whiny Wokies on Twitter found
    someonetocarrytheircensorshipbanner.Thisdamneditformisn’tworking.

  15. So Musk was still in the process of buying more stock and didn’t want to advertise only making the cost of the stock increase. So now shareholders have more valuable stock and complain. Just because he couldn’t get on the Musk wagon as it passed him by.

    I wonder if our members of Congress are disclosing their purchase of oil company stocks when they knew oil prices would skyrocket?

    1. Congress’ hypocrisy is well taken, being far more than “well noted” at this point.

  16. So, Rasella, what do think should happen? Musk give up his shares? Then the company should pay him at the current market price. A fine? Sure, $281 billion and a fine is going to really make a difference. This isn’t something you can send him to jail for, either. So, your lawsuit is pretty meaningless, AFAIAC.

  17. The Twitter AZZHOLES will try ANYTHING to stop Musk from giving people back their FREE SPEECH !! This ONE AZZHOLE didn’t come up with this idea on his own, nor is he financing this “lawsuit” ! The Dems are at it AGAIN !!

  18. More proof these criminals have interfered with voter rights, 1st amendment rights and are threatened by infiltration of outsider.

  19. The small investor’s stock value went up 25%. They are suing because they made money???? Must be stooooopid liberals.

    1. Well, my understanding is that, according to this lawsuit, those people lost a chance to make money. If Musk had reported like the law said he should, people would have known the stock price would go up, and could have made a profit from it. You earn when you sell your stock to other people, so long as your selling price is higher than what you paid to get it.
      It’s a pretty bad argument, though. That increase won’t make the stock too expensive to keep someone from buying it. As long as the price remains high, and I sell mine during that time, I can still profit. My point being, the lawsuit only works when we assume everyone else is stupid, which seems to be exactly what elitist leftists believe.

  20. They’re running scared the big wolf is in town. They can’t control the dumb masses because we’ve someone to fight for us. I hope anyway…

  22. “derivatives acquired with control intent”. The court will have to prove “control intent”.

  23. Had Musk filed sooner, the complainant would have faced a higher price sooner
    He was free to buy the lower price shares for longer
    So if I find a deal that you didn’t, am I required to compensate you for not finding it

    BTW: You need to stop blowing up my screen with your pop up videos-not interested

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