A Twitter shareholder wants to take Elon Musk to court for hiding his entry into the company
A Twitter shareholder has decided to sue Elon Musk after he entered the capital of the social network. According to the complaint, the billionaire would not have respected the legal deadlines to declare his taking of interests. According to the petitioner, this delay prevented other Twitter shareholders from riding the rise in Twitter’s stock price when the market reacted to Musk’s investments.
As you may know, Elon Musk once again occupied the media scene in early April 2022. Indeed, the billionaire created a surprise by announcing his entry into the capital of Twitter thanks to a massive investment of 2.7 billions of dollars. Now in possession of 9.2% of the social networkthe boss of Tesla went in the space of a few days from a simple user to one of the leaders of Twitter.
Following this announcement, that caused Twitter’s share price to explode on the stock exchange, Elon Musk outbids and confirms his arrival on the board of directors of the blue bird. Only, situation reversal 24 hours later. Finally, the founder of SpaceX specifies that he will not sit on Twitter’s board… after having suggested transforming Twitter’s headquarters into a refuge for the homeless.
As you will have understood, Elon Musk had to drive the social network managers crazy, just like the other shareholders. On this subject, one of them decided to file a complaint against the boss of Starlink. In this complaint filed with stock market regulators, Elon Musk is accused of not having respected the legal deadlines to formalize his entry into the capital of Twitter.
Elon Musk caused other shareholders to lose money
Explanations: the leader of Tesla began to buy Twitter shares massively in January 2022. As of March 14, Elon Musk held 5% of the capital of the social network. However, as required by the rules set by the Securities and Exchange Commission (SEC), any new investor in possession of 5% of a company must publicly declare its participation within 10 days.
In other words, Elon Musk should have formalized his entry into the capital of Twitter on March 24 at the latest. Only, he did it only much later, on April 4, 2022. If this delay does not seem particularly important at first glance, it would have actually allowed Elon Musk to earn $ 156 million. According to the complaint, these gains were made at the expense of other shareholders, who were unable to benefit from the beneficial effects of Musk’s entry into the capital on Twitter’s share value.
“Investors who sold Twitter stock between March 24, 2022, when Mr. Musk was required to disclose his Twitter stake, and before the actual disclosure on April 4, 2022, missed the rise in share price that resulted when the market reacted to Mr. Musk’s purchases and were harmed as a result,” claims the petitioner. Moreover, he assures that Elon Musk has done “materially false and misleading statements and omissions in failing to disclose to investors that he acquired a 5% stake in Twitter as required.”