Tesla and SpaceX CEO Elon Musk is facing a lawsuit from former Twitter shareholders who claim he failed to disclose his stake in the social media platform in orderly time, which prevented them from profiting from the rise in stock prices.
Musk purchased a 9.2 percent stake in Twitter, becoming the social media company’s largest shareholder. He reportedly has denied a position on the board but was offered a position.
In a class-action lawsuit filed in Manhattan federal court, plaintiff and stockholder Marc Bain Rasella said he is suing on behalf of all Twitter shareholders who held stock between March 24, when Musk passed the 5 percent ownership threshold in the social media company, and April 1.
According to a copy of the lawsuit uploaded by NPR, Musk was required to file with the Securities and Exchange Commission within 10 days after passing the 5 percent ownership threshold, but he did not do so until April 4.
After his announcement on April 4, Twitter shares rose 27 percent from April 1, and those who bought out of the stock “missed the resulting share price increase,” according to the lawsuit.
“The members of the class [action lawsuit] are so numerous that joinder of all members is impracticable,” said Rasella, claiming “hundreds or thousands” of people were involved in the lawsuit.
Rasella said he is seeking financial relief in the lawsuit that will be determined at trial.
The Hill has reached out to Musk and his legal team for comment.
Since purchasing his slice of Twitter, Musk has been vocal on the social media platform about changes, including his push for an edit feature and verifications for Twitter Blue.
Author: Brad Dress