Musk sued by Twitter investors for stock ‘manipulation’

Twitter investors have sued billionaire Elon Musk alleging he manipulated the company’s share price downward as electric carmaker Tesla’s chief executive mounts a $44 billion takeover bid for the networking platform. social.

Investors said Musk saved $156 million by not disclosing that he had bought more than 5% of Twitter before March 14.

They asked to be certified as a class and to receive an unspecified 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.

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

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

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

Shares of Tesla were trading around $713 yesterday, down from $1,000 in early April.

The timing of Musk’s disclosure of his involvement has already triggered an investigation by the US Securities and Exchange Commission (SEC), the Wall Street Journal reported earlier this month.

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 that Musk’s public criticism of the company, including a May 13 tweet that said the purchase was “temporarily on hold” until Twitter showed that spam bots accounted for less than 5% of its users, amounted to an attempt to drive the share price down even further.

Musk this week pledged an additional $6.25 billion in equity financing to fund his Twitter bid, a sign he is still working to complete the deal.

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