Musk sued for late disclosure of stake in Twitter

Tesla CEO Elon Musk has been slapped with a lawsuit that alleges he delayed disclosing his stake in social media company Twitter to buy more shares at lower prices – an action that would go against US securities law – reported Associated Press.

Image credit: Automobile.

The lawsuit, filed on Tuesday in New York federal court, alleges Musk failed to disclose his shareholding in the micrblogging platform within 10 days of allegedly reaching the 5% stake threshold on March 14, breaching regulatory guidelines. Musk only made the required disclosure on April 4, after he had secured a 9.1% stake in Twitter and become the company’s largest shareholder.

The disclosure caused Twitter’s shares to rocket 27% from its closing price of US$39.31 on April 1 to US$49.97 on April 4. Musk was able to continue buying shares at prices between US$33.97 to US$40.69 during that time.

This strategy of delaying the disclosure, according to the lawsuit, hurt less wealthy investors who had sold their Twitter shares between March 24 and April 4, depriving them of the chance to make significant gains on their share sales.

See also: The Elon Musk of Singapore looks to engineer the next deep-tech unicorn