Elon Musk appears to be in a hot spot with his recent purchase of Twitter shares.
A lawsuit brought by a fellow Twitter investor accused the billionaire of taking shareholder money while Musk himself saved about $143 million.
Mark Payne Rasella’s lawsuit filed in New York federal court on Tuesday, April 12 highlights Musk’s apparent failure to report his March 14 stake purchase to the Securities and Exchange Commission (SEC) within the 10 days required by law when the stake exceeds 5% .
Specifically, the lawsuit alleges that Musk made “materially false and misleading statements and omissions by failing to disclose to investors that he had acquired a 5% ownership interest in Twitter as required.”
It says that means that anyone who sold shares between March 24 (the date Musk should have announced the purchase) and April 4 (the date details of the purchase were announced) lost their gains as Twitter’s share value jumped 27% when the purchase became known.
The lawsuit also claims that the Tesla and SpaceX chief earned $143 million in the same 11-day period when he bought more Twitter shares at a low price, a move that saw him become the company’s largest single shareholder with a 9.2% stake.
Rasella’s lawsuit is seeking class-action status on behalf of Twitter investors who sold shares during a crucial 11-day period, thus missing out on gains that would have benefited them had Musk disclosed his investment within the required time frame. The procedure calls for a jury trial of compensatory and punitive damages of unspecified amounts.
Musk, a longtime critic of Twitter who happens to have more than 80 million followers on the platform, caused a stir with his surprise investment in the San Francisco-based company when it surfaced last week.
Twitter responded by offering Musk a seat on its board, but he abruptly rejected the offer on Friday, the same day the appointment was due to become effective. Twitter didn’t announce Musk’s change until Monday after a weekend in which Musk released a batch of now-deleted tweets that referenced many Twitter-related thoughts from the serious to the absurd.
The Securities and Exchange Commission has made no public comment on whether it plans to take action against Musk for his apparent failure to disclose his stock purchase within the specified time frame.
Musk’s representatives also declined to comment on the lawsuit. Musk hasn’t tweeted about it yet, either…