A Twitter shareholder is suing Elon Musk over claims the world’s richest person waited too long disclose he had taken a 5% stake in the social media company. Musk eventually went on to acquire 9.2% of all Twitter shares.
According to federal regulations, an investor must file a Schedule 13 with the U.S. Securities and Exchange Commission (SEC) within 10 days of passing the 5% threshold.
Since Musk did not do this, the lawsuit claims Musk was able to keep prices artificially low and continue buying shares at a lower price than he otherwise would have been able to had his initial purchase been disclosed.
“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 $39.91 per share on April 1, 2022, to close at $49.97 per share on April 4, 2022 — an increase of approximately 27%.” (via TechCrunch)
The plaintiff is Marc Bain Rasella, who filed the lawsuit on behalf of “all investors who sold or otherwise disposed of Twitter, Inc. securities between March 24, 2022 and April 1, 2022, inclusive.”
Musk’s share purchase was first announced by Twitter on April 4. One day later it was announced he was joining the company’s board of directors, after which he began proposing a number of sweeping changes including an edit button, paying to be certified with a checkmark, and even converting Twitter HQ into a homeless shelter.
It was all apparently too much for Twitter, announcing on April 10 Musk was no longer taking a seat on the board.