Elon Musk Wants to Dismiss Lawsuit Alleging Delayed Disclosure of Twitter Stake
TapTechNews July 7th news, according to Reuters, Tesla CEO Elon Musk hopes to dismiss a lawsuit against him by a former Twitter shareholder, which alleges that Musk delayed disclosing his large stake in Twitter in early 2022. Musk argued that all indications show that his delayed disclosure was a mistake.
Late Wednesday night, Musk said in a filing in Manhattan federal court that the claim that he wanted to defraud shareholders who were unaware of his 9.2% stake in Twitter and missed out on huge benefits due to the sale of their shares by these shareholders was unbelievable.
Investors in the class action lawsuit said that Musk and his wealth manager Jared Birchall knew the regulations of the US Securities and Exchange Commission (SEC) that required Musk to disclose information about his holding more than 5% stake in Twitter by March 24, 2022, but Musk postponed it for 11 days.
Investors said that this enabled Musk to buy more shares at a lower price, saving more than 200 million US dollars. After Musk disclosed his 9.2% stake in Twitter on April 4, 2022, Twitter's (now renamed X) share price rose by 27%.
In the filing, Musk said that he originally intended to disclose his stake in Twitter at the end of 2022, but after realizing that he had misinterpreted the SEC's disclosure rules, he promptly made the disclosure.
This is not a fraud scheme, Musk said, all indications, including the accusations in the complaint, point to this being a mistake.
Musk also denied investors' claims that an unnamed Morgan Stanley banker helped formulate a trading strategy to acquire a large number of Twitter shares without attracting market attention.
Musk eventually acquired the San Francisco-based Twitter company in October 2022 for 44 billion US dollars (TapTechNews note: currently about 320.403 billion Chinese yuan). The SEC has also launched an investigation into his acquisition of Twitter shares.
In September last year, US District Judge Andrew Carter refused to dismiss an earlier version of the lawsuit on the grounds that the evidence showed that Musk understood the SEC's disclosure regulations and had sworn to make such a statement.