Musk sued by Twitter investors for ‘manipulating’ shares in takeover bid

NEW YORK, May 26 (Reuters) – Billionaire Elon Musk has been sued by investors at Twitter Inc (TWTR.N) claiming he manipulated the company’s share price lower, as the chief general of electric car maker Tesla Inc (TSLA.O) racks up $44 billion. takeover bid on social media platform.

Investors said Musk saved $156 million by failing to disclose that he had bought more than 5% of Twitter by March 14. They asked to be certified as a class and be awarded an undetermined amount of punitive and compensatory damages.

They also named Twitter as a defendant, arguing that the company had an obligation to investigate Musk’s conduct, although they are not seeking damages from the company.

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Investors said Musk continued to buy shares after that and finally disclosed in early April that he owned 9.2% of the company, according to the lawsuit, filed Wednesday in federal court in San Francisco.

“By delaying disclosure of his Twitter stake, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the investors, led by Virginia resident William Heresniak, said.

Neither Musk nor his attorney immediately responded to requests for comment. Twitter declined to comment.

Investors said the recent drop in Tesla shares has put Musk’s ability to finance his acquisition of Twitter in “great jeopardy” as he pledged his shares as collateral to secure the loans he needs to buy the company. .

Tesla shares were trading at around $713 on Thursday afternoon, down from more than $1,000 in early April.

The timing of Musk’s disclosure has already sparked a U.S. Securities and Exchange Commission (SEC) investigation, The Wall Street Journal reported earlier this month. Read more

The SEC requires any investor who buys more than a 5% stake in a company to disclose their holdings within 10 days of crossing the threshold.

Investors also said Musk’s public criticism of the company, including a May 13 tweet saying the takeover was “temporarily suspended” until Twitter proves spambots were less than 5 % of its users, amounted to an attempt to push the stock price further down.

Musk on Wednesday pledged an additional $6.25 billion in equity funding to fund his Twitter offer, a sign that he is still working to complete the deal. Read more

Musk was sued earlier this month in Delaware Chancery Court by a Florida pension fund seeking to terminate the deal on the grounds that other major Twitter shareholders supported the takeover, a violation of US law. Delaware. Heresniak’s lawsuit does not seek to stop the takeover. Read more

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Reporting by Luc Cohen in New York and Tom Hals in Wilmington, Del. Editing by Noeleen Walder, Nick Zieminski and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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