According to Reuters, investors believe that the entrepreneur saved $156 million by hiding information that, as of March 14, he owned more than 5% of Twitter shares.
A group of Twitter investors filed a lawsuit in a California court against entrepreneur Elon Musk, accusing him of manipulating the market in order to create favorable conditions for themselves in the process of acquiring this company. This was reported by Reuters, noting that the claim was filed a day earlier in the federal court of San Francisco.
“Investors believe that Musk saved $156 million by hiding information that, as of March 14, he owned more than 5% of Twitter shares,” the agency said.
According to American law, an investor must notify the shareholders of the company within 10 days after buying more than 5% of the shares of a particular company. This is necessary so that shareholders know in advance about the investor’s intention to gain control of the company. Musk announced that he owned 9.2% of Twitter shares only on April 4, although the threshold of 5% was crossed on March 14.
Immediately after Musk’s announcement on April 4, the company’s stock prices increased significantly. And investors believe that the same thing would have happened on March 14 if the entrepreneur had fulfilled the requirements of the law, but Musk, in their opinion, deliberately delayed the disclosure of information about his stake in the company. “Without disclosing this data, Musk was engaged in manipulation and bought shares of the company at an undervalued price,” Reuters quoted William Heresnyak, a representative of the investor group, as saying. Investors also believe that Musk’s refusal to acquire Twitter until the head of the company provides evidence that the number of fake accounts in the social network is less than 5% can be regarded as an attempt to further reduce the share price.
Those who filed the lawsuit insist that the court oblige Musk to compensate them for losses, the amount of which is not specified, as well as to pay a fine. In parallel, the investigation into Musk’s untimely disclosure of data on his purchase of Twitter shares is being conducted by the U.S. Securities and Exchange Commission.