NEW YORK, May 26 (Reuters) – Billionaire Elon Musk has been sued by Twitter Inc. (TWTR.N) investors for allegedly manipulating the company’s stock price down as CEO of electric car maker Tesla Inc. (TSLA.O) goes up $ 44 billion. OPA of the social networking platform.
Investors said Musk saved $ 156 million by not revealing that he had bought more than 5% of Twitter on March 14th. They asked to be certified as a class and to be awarded an unspecified amount of punitive and compensatory damages.
They also named Twitter as the defendant, arguing that the company had an obligation to investigate Musk’s conduct, even though they are not claiming damages from the company.
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Investors said Musk continued to buy shares after that, and finally revealed in early April that he owned 9.2% of the company, according to a lawsuit filed Wednesday in San Francisco federal court.
“By delaying the disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter shares at an artificially low price,” said investors, led by Virginia resident William Heresniak.
Neither Musk nor his attorney responded immediately to requests for comment. Twitter declined to comment.
Investors said the recent drop in Tesla shares has put Musk’s ability to finance its Twitter acquisition in “significant danger” as it has pledged its shares as collateral to secure the loans it needs to buy the company.
Shares of Tesla were trading around $ 713 on Thursday afternoon, up above $ 1,000 in early April.
The time Musk revealed his involvement has already triggered an investigation by the U.S. Securities and Exchange Commission (SEC), the Wall Street Journal reported earlier this month. Read more
The SEC requires any investor who acquires a stake of more than 5% in a company to disclose its holdings within 10 days of exceeding the threshold.
Investors also said Musk’s public criticism of the company, including a May 13 tweet stating that the purchase was “temporarily suspended” until Twitter showed that spam bots accounted for less than 5% of its users, were an attempt to further drive the price of shares down.
Musk on Wednesday pledged an additional $ 6.25 billion in equity funding to fund his Twitter bid, a signal he is still working on to complete the deal. Read more
Musk was sued earlier this month in Delaware Chancery Court by a Florida pension fund seeking to stop the deal on the basis that some other major Twitter shareholders supported the purchase, a violation of Delaware law. . Heresniak’s lawsuit is not intended to stop the inauguration. Read more
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Report by Luc Cohen in New York and Tom Hals in Wilmington, Del. Edited by Noeleen Walder, Nick Zieminski and Matthew Lewis
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