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A shareholder of the company on Tuesday launched a class action lawsuit against the multi-billionaire in a New York court for alleged securities fraud. This was announced by the competent law firm in Boston. As expected, other shareholders will soon join the lawsuit, who also believe they have been deceived.
The plaintiffs accuse Musk of failing to publicize his investment on Twitter within the legal reporting deadline. This delayed a stock market reaction and kept the stock price artificially low while he continued to increase his stake. Musk did not initially comment on the lawsuit.
Strict rules apply when holdings in US companies exceed the 5% threshold. On April 4, Musk announced in a mandatory SEC filing that he had a good nine percent stake in Twitter. This news caused the stock price to rise sharply.
But according to the lawsuit, Musk’s stake was already above five percent in mid-March – without him disclosing it within ten days. As a result, Musk was able to continue buying cheap Twitter shares until the April 4 announcement. Investors who sold during this period were disadvantaged. Plaintiff’s attorneys urged shareholders who sold Twitter stock between March 24 and April 1, 2022 to join the lawsuit.
Musk should have gotten a seat on the board after joining Twitter. But then the Tesla boss changed his mind in the short term. Musk has over 80 million Twitter followers and always grabs headlines with his tweets. On Saturday, for example, he asked, “Is Twitter dying?”. His cryptocurrency tweets are also notorious, which, depending on the trend, drives the price of individual digital coins up or down.
Musk had previously landed himself in legal trouble over tweets that affected Tesla’s stock price. He was accused of using false statements to make propaganda. According to a U.S. Securities and Exchange Commission (SEC) ruling, Musk has only been allowed to tweet about certain topics such as Tesla financials and production numbers since 2019 if an attorney has verified those messages first. .
Twitter shares closed up 3.10% at $45.86 on the New York Stock Exchange on Wednesday.
NEW YORK (dpa-AFX)
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