A US shareholder accuses the tech billionaire, among other things, of having saved a lot of money at the expense of shareholders by violating information obligations when buying Twitter shares. Other lawsuits with such allegations against Musk had already been launched in April. US law firms are preparing further proceedings.
But the new lawsuit goes beyond the allegation that Musk’s Twitter investment failed to comply with legal reporting deadlines. The plaintiff also alleges that the star entrepreneur sent Twitter’s stocks plummeting with his post-deal comments. The lawsuit, launched on Wednesday on behalf of a Virginia shareholder, is designed as a class action lawsuit that other investors can join.
Musk has not yet commented on the allegations. The accusation that he disregarded stock exchange rules when he joined Twitter as a major investor is particularly explosive. Strict regulations apply to larger holdings in US companies: if they exceed the threshold of five percent, this must be made public within ten days by way of a mandatory notification. According to the lawsuits, Musk exceeded this deadline by eleven days.
This may at first seem like a small mistake, but a lot of money is involved. Because Musk’s entry initially caused the share to rise sharply. Since he did not disclose his investment in good time, the plaintiffs believe he was able to continue buying shares at a reasonable price. Investors who sold during this time were disadvantaged. The latest lawsuit accuses Musk of saving $156 million through the late filing.
Lawyers accuse Musk of market manipulation and securities fraud. A number of major US law firms, including Hagens Berman – known, for example, for the “Dieselgate” class action lawsuits against Volkswagen – have been drumming up clients against Musk for weeks. For the Tesla boss, his controversial actions on Twitter could also result in supervisors. According to media reports, US authorities such as the SEC and the FTC are also investigating Musk.
But now it’s no longer just a question of whether everything went right when Musk joined the company. Because after he agreed on a takeover with Twitter, he triggered further price turbulence with his statements. Musk sharply criticized the company and then even declared the deal suspended because he suspected that the proportion of spam and bot accounts was higher than Twitter stated. As a result, the share price dropped sharply at times. The lawsuit now also blames Musk for the price slide.
From Twitter’s point of view, however, the tech billionaire cannot unilaterally put the agreement on hold. The Board of Directors is determined to complete the deal for the agreed $54.20 per share. A vote by the shareholders is still pending. The most recent shareholder lawsuit is also directed against Twitter. The group is accused of breaches of duty in connection with Musk’s actions, but there are no claims for damages.
Twitter shares meanwhile traded 1.77 percent higher on the NYSE on Friday at $40.22, a long way from Musk’s offer.
SAN FRANCISCO (dpa-AFX)
Leverage must be between 2 and 20
No data
More news about Twitter
Image sources: 1000 Words / Shutterstock.com, Quka / Shutterstock.com