ЕIоn Мusк Accused Of Breaking Law While Buying Twitter Stock

ЕIоn Мusк Accused Of Breaking Law While Buying Twitter Stock post thumbnail image
The complaint in New York federal court accuses Мusк of violating a regulatory deadline to reveal he had accumulated a stake of at least 5%.
Experts have called for legal involvement in ЕIоn Мusк’s digital assets

ЕIоn Мusк’s huge Twitter investment took a new twist Tuesday with the filing of a lawsuit alleging that the colorful billionaire illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.

The complaint in New York federal court accuses Мusк of violating a regulatory deadline to reveal he had accumulated a stake of at least 5%. Instead, according to the complaint, Мusк didn’t disclose his position in Twitter until he’d almost doubled his stake to more than 9%. That strategy, the lawsuit alleges, hurt less wealthy investors who sold shares in the San Francisco company in the nearly two weeks before Мusк acknowledged holding a major stake.

Мusк ‘s regulatory filings show that he bought a little more than 620,000 shares at $36.83 apiece on Jan. 31 and then continued to accumulate more shares on nearly every single trading day through April 1. Мusк, best known as CEO of the electric car maker Tesla, held 73.1 million Twitter shares as of the most recent count Monday. That represents a 9.1% stake in Twitter.

The lawsuit alleges that by March 14, Мusк’s stake in Twitter had reached a 5% threshold that required him to publicly disclose his holdings under U.S. securities law by March 24. Мusк didn’t make the required disclosure until April 4.

That revelation caused Twitter’s stock to soar 27% from its April 1 close to nearly $50 by the end of April 4’s trading, depriving investors who sold shares before Мusк’s improperly delayed disclosure the chance to realize significant gains, according to the lawsuit filed on behalf of an investor named Marc Bain Rasella. Мusк, meanwhile, was able to continue to buy shares that traded in prices ranging from $37.69 to $40.96.

The lawsuit is seeking to be certified as a class action representing Twitter shareholders who sold shares between March 24 and April 4, a process that could take a year or more.

Мusкspent about $2.6 billion on Twitter stock — a fraction of his estimated wealth of $265 billion, the largest individual fortune in the world. In a regulatory filing Monday, Мusк disclosed he may increase his stake after backing out of an agreement reached last week to join Twitter’s board of directors.

Jacob Walker, one of the lawyers who filed the lawsuit against Мusк, told The Associated Press that he hadn’t reached out to the Securities and Exchange Commission about Мusк’s alleged violations about the disclosure of his Twitter stake. “I assume the SEC is well aware of what he did,” Walker said.

An SEC spokesperson declined to comment.

The SEC and Мusк have been wrangling in court since 2018 when Мusк and Tesla agreed to pay a $40 million fine to settle allegations that he used his Twitter account to mislead investors about a potential buyout of the electric car company that never materialized. As part of that deal, Мusк was supposed to obtain legal approval for his tweets about information that could affect Tesla’s stock price — a provision that regulators contend he has occasionally violated and that he now argues unfairly muzzles him.

Мusк didn’t immediately respond to a request for comment posted on Twitter, where he often shares his opinion and thoughts. Alex Spiro, a New York lawyer representing Мusк in his ongoing dispute with the SEC, also didn’t immediately respond to a query from The Associated Press.

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