Tesla CEO and Billionaire Elon Musk is getting sued by Twitter investors for delayed disclosure of his stake in the social media company in a complaint filed on Wednesday in California federal court.
Musk allegedly saved $156 million by failing to declare that he had purchased more than 5% of Twitter by March 14th, according to the investors. He continued to buy stock after that, eventually revealing that he owned 9.2% of the company in early April.
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” said the investors, led by Virginia resident William Heresniak.
Musk Creating Doubt Regarding Twitter Deal?
According to the lawsuit, the billionaire Tesla CEO tweeted and made statements in an attempt to cast doubt on the deal, which has roiled social media for weeks.
Musk stated last week that his attempt to buy Twitter won’t go through unless he has confirmation of the platform’s spam problem, adding to the uncertainty surrounding his roller-coaster pursuit of the platform.
The suit stated that Musk’s tweet stating the plan to buy Twitter was “temporarily on hold” disregarded the reality that nothing in the purchase contract allows for so.
The suit claimed that Musk was well aware that certain Twitter accounts were operated by software “bots” rather than genuine humans, and that he had even posted about it before making his offer to buy the company.
“Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially,” according to the complaint.
The suit claimed that his goal was to create leverage so that he could get Twitter for a substantially lower price or back out of the agreement without facing any consequences.
“Musk’s market manipulation worked — Twitter has lost $8 billion in valuation since the buyout was announced,” stated the claim.
“Musk’s disregard for securities laws demonstrates how one can flaunt the law and the tax code to build their wealth at the expense of the other Americans,” the court filing said.
The investors allege that the current decline in Tesla’s stock has put Musk‘s ability to finance his acquisition of Twitter in serious jeopardy since he has pledged his shares as collateral to secure the loans he needs to buy the company.
Tesla’s shares were trading around $700 on Thursday, down from above $1,000 in early April.
The investors want to be certified as a class and to be granted an undefined amount of punitive and compensatory damages in their lawsuit filed on Wednesday.