Elon Musk sued by Twitter shareholder, Here's WHY?

Washington: One of Twitter shareholders, Marc Bain Rasella, filed a lawsuit against US billionaire Elon Musk for not disclosing his stake in the company by the official deadline and thus purchasing shares at a lower price causing harm to other Twitter investors.

On April 4, Musk said that he had acquired a 9.2 per cent stake in Twitter, after which the microblogging company's shares jumped in price by 28 per cent at pre-market trading sessions.

"Investors who sold shares of Twitter stock between March 24, 2022, when Musk was required to have disclosed his Twitter ownership, and before the actual April 4, 2022 disclosure, missed the resulting share price increase as the market reacted to Musk's purchases and were damaged thereby," the lawsuit, filed in Manhattan federal court on Tuesday, reads.

According to the plaintiff, Musk began acquiring shares of Twitter stock in January. By March 14, he allegedly owned over 5 per cent of shares. The date, March 14, was indicated by the US Securities and Exchange Commission as a deadline for the disclosure of Musk's stake in the company.

The billionaire was required to tell the commission that he had exceeded the 5 per cent threshold within 10 days, that was, until March 24. Instead, Musk continued buying shares of Twitter stock and provided the relevant information only on April 4, when he already owned over 9 per cent of shares, the plaintiff said.

The lawsuit was filed on behalf of all investors who sold or otherwise disposed of Twitter securities between March 24 and April 1.

The US company Twitter Inc. was founded in 2006. The company's main product is a social network for exchanging short messages. The headquarters is located in San Francisco, California. (UNI)