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Apart from the company’s shareholders, the U.S. Securities and Exchange Commission (SEC) is also suing Elon Musk over improper disclosure.
Elon Musk is facing a lawsuit for alleged fraud related to his disclosure of Twitter shares. The case claims that Musk failed to properly report his stock purchases, potentially misleading investors and violating securities regulations. This legal battle adds to the billionaire’s ongoing controversies surrounding his acquisition and management of the social media platform, now rebranded as X.
Shortly after revealing that he had sold social media platform X to an AI company, Elon Musk faced a legal setback as a U.S. judge on Friday denied his motion to dismiss a lawsuit accusing him of defrauding Twitter shareholders regarding his investment in the company, according to a report by Reuters.
A Manhattan district judge, Andrew Carter, has ruled that shareholders of the platform formerly known as Twitter have presented sufficient evidence to support claims that Elon Musk intentionally engaged in fraudulent activities. The allegations include an improper regulatory filing, misleading statements about the platform’s future, and a calculated strategy to discreetly amass his stake in the company.
In a surprising political development, Musk has now been appointed as the head of the Department of Government Efficiency (DOGE) under US President Donald Trump. This new role adds to his extensive portfolio, which includes leadership of SpaceX and Tesla.
Elon Musk is facing legal action from both Twitter shareholders and the U.S. Securities and Exchange Commission (SEC) over allegations of improper disclosure regarding his stock acquisitions. The lawsuit claims that Musk failed to meet the 2022 deadline to disclose when he first acquired 5% of Twitter’s shares and again when he increased his stake to 9.2%.
According to the plaintiffs, this delay allowed Musk to save over $200 million while negatively impacting other investors, who sold their shares at artificially low prices. Following his stake revelation on April 4, 2022, Twitter’s stock price surged by 27%, raising concerns about market manipulation. Musk later went on to purchase the platform in October 2022.
A judge overseeing the case noted that Musk’s 9.2% investment might have misled investors into believing he was making a short-term financial move rather than a full acquisition. Additionally, shareholders argue that two of Musk’s tweets from March 26, 2022, further misled the market. In one tweet, Musk stated he was “giving serious thought” to creating a rival platform, while in another, he jokingly responded to a suggestion about buying Twitter and changing its bird logo to Doge, saying, “Ha ha that would [be] sickkk.”
The case underscores the ongoing scrutiny of Musk’s actions leading up to his $44 billion takeover of Twitter and the impact his social media statements have on financial markets.
Elon Musk to Face Fraud Lawsuit Over Delayed Disclosure of Twitter Stake
U.S. District Judge Andrew Carter in Manhattan ruled that the plaintiffs have sufficiently alleged that Elon Musk intended to engage in fraud through a misleading regulatory filing and deceptive tweets regarding Twitter’s future.
U.S. Judge Rejects Elon Musk’s Bid to Dismiss Twitter Shareholder Fraud Lawsuit
In a significant legal development, a U.S. judge has denied billionaire Elon Musk’s attempt to dismiss a lawsuit accusing him of defrauding former Twitter shareholders. The lawsuit alleges that Musk deliberately delayed disclosing his initial investment in the social media platform, now rebranded as X.
U.S. District Judge Andrew Carter, based in Manhattan, ruled on Friday that the plaintiffs presented sufficient evidence to support their claim that Musk intended to commit fraud. The allegations center around an improper regulatory filing, misleading tweets regarding Twitter’s future, and a calculated strategy to quietly increase his stake in the company.
While Carter dismissed some other claims in the lawsuit, the core fraud allegations against Musk remain intact, allowing the case to proceed. This ruling marks another legal challenge for the Tesla and SpaceX CEO as he continues to navigate controversies surrounding his business dealings.
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