SAN FRANCISCO ( Associated Press) – Elon Musk’s huge Twitter investment took a new turn on Tuesday with a lawsuit alleging the billionaire of color illegally delayed the disclosure of his stake in the social media company So that he can buy more shares at a lower price.
In a complaint in federal court in New York, Musk accuses Musk of violating a regulatory deadline to reveal that he accumulated at least a 5 percent stake. Instead, according to the complaint, Musk did not disclose his position on Twitter until he had nearly doubled his stake to more than 9 percent. The lawsuit alleges that that strategy hurt less wealthy investors, who sold shares in the San Francisco company nearly two weeks before Musk accepted a major stake.
Read more: SEC Claims Right To Summons Elon Musk Over Tweet
Musk’s regulatory filing shows he bought more than 620,000 shares at $36.83 on January 31 and then continued to accumulate more shares nearly every single trading day until April 1. Musk, best known as the CEO of electric car maker Tesla, held 73.1 million Twitter shares as of the most recent count Monday. This represents a 9.1 percent stake in Twitter.
The lawsuit alleges that by March 14, Musk’s stake in Twitter had reached a threshold of 5 percent, which required him to publicly disclose his stake under US securities law by March 24. Musk didn’t make the required disclosure until April 4.
That revelation caused Twitter’s stock to rise 27 percent from April 1 to nearly $50 by the end of April 4 trading, giving investors who sold shares before Musk’s unreasonably delayed disclosure a chance to realize significant gains. As per the suit filed on behalf of Mila. An investor named Mark Bain Russell. Meanwhile, Musk was able to continue buying shares that traded in the range of $37.69 to $40.96.
The lawsuit is seeking to be certified as a class action representation representing Twitter shareholders who sold shares between March 24 and April 4, a process that could take a year or more.
Musk spent about $2.6 billion on Twitter stock—a fraction of his estimated $265 billion in wealth, the largest personal fortune in the world. In a regulatory filing on Monday, Musk revealed that he may increase his stake after withdrawing from an agreement reached last week to join Twitter’s board of directors.
Jacob Walker, one of the attorneys who filed the lawsuit against Musk, told The Associated Press that he had not reached out to the Securities and Exchange Commission about Musk’s alleged violations regarding disclosure of his Twitter stake. “I think the SEC knows very well what it did,” Walker said.
An SEC spokesperson declined to comment.
The SEC and Musk have been feuding in court since 2018 when Musk 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. which never materialized. As part of that deal, Musk had to obtain legal approval for his tweets about information affecting Tesla’s stock price — a provision that regulators argue he has occasionally violated and now Argues that he wrongly harasses her.
Musk did not immediately respond to a request for comment, posted on Twitter, where he often shares his opinions and thoughts. Alex Spiro, the New York attorney representing Musk in the ongoing dispute with the SEC, also did not immediately respond to a query from the Associated Press.