What you need to know
- Tesla CEO Elon Musk is facing a lawsuit over the late disclosure of his Tesla stock buy.
- Musk should have filed forms to say he had bought 5% of Twitter stock, but didn't.
- A Twitter shareholder believes Musk cost existing shareholders money when they sold their shares without knowing the news.
Tesla CEO Elon Musk has found himself on the receiving end of a federal lawsuit after his failure to correctly disclose his purchase of Twitter shares, potentially impacting the finances of other shareholders.
The suit, filed yesterday in the U.S. Southern District of New York, claims that Musk was 10 days late when filing the required form that would confirm his stock buy. That form should have been completed after he held more than 5% of Twitter shares on March 24 — but it wasn't filed until April 4. The news of Musk's investment in Twitter say share prices rise 24%, reports Variety.
Now, Twitter shareholder Marc Bain Rasella believes that those who sold stock between the two dates were shortchanged because the stock price would have been higher had Musk filed the paperwork on time.
"Defendant Musk, because of his position as a 5% owner in Twitter, had an obligation to file a Schedule 13 with the SEC. Defendant had the obligation, ability, and opportunity to prevent the issuance of the false statements and omissions alleged herein," the suit states. "Because of his position as a 5% owner in Twitter, and access to material non-public information available to himself but not to the public, Defendant Musk knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the omissions being made were false and misleading."
This is just the latest in an ongoing farce that saw Musk announced as being Twitter's newest board member following the $2.9 billion stock buy. Then, Musk went on a tweeting spree that, among other things, asked whether Twitter was dying. Then came the news that the outspoken Tesla man wouldn't be joining the board after all.
