Elon Musk's massive Twitter stake took a new turn yesterday when a complaint was filed alleging that the controversial billionaire illegally delayed revealing his ownership in the social media platform in order to acquire more shares at lower rates.
Musk is accused of breaking a regulatory date to report he has obtained a stake of at least 5% in Tesla in a complaint filed in federal court in New York.
According to the accusation, Musk didn't reveal his Twitter investment until he had nearly increased it to more than 9%.
The lawsuit claims that this technique harmed less wealthy shareholders who sold stocks in the San Francisco firm almost two weeks before Musk revealed he owned a significant stake.
According to regulatory records, Musk purchased a bit more than 620,000 shares at $36.83 each on Jan. 31 and continued to buy more shares on practically every trading day until April 1.
Musk, the CEO of Tesla, had 73.1 million Twitter shares as of Monday's count. This equates to a 9.1% ownership share in Twitter.
As per the lawsuit, Musk's Twitter position had hit a 5% threshold by March 14, requiring him to publicly declare his interests under U.S. securities law by March 24.
He waited until April 4 to make the obligatory disclosure.
As shown in a lawsuit submitted on behalf of a shareholder named Marc Bain Rasella, that discovery caused Twitter's stock to skyrocket 27% from its April 1 close to $50 by the tail end of April 4's trading.
This deprived shareholders who marketed stocks before Musk's inadequately postponed reporting the opportunity to realize significant gains.
Musk, on the other hand, was able to continue buying shares at various prices from $37.69 to $40.96.
The complaint is trying to be authorized as a group action on behalf of Twitter investors who purchased stock between March 24 and April 4, a procedure that may take another year or longer.
Musk paid $2.6 billion buying Twitter stock, a small portion of his $265 billion fortune, the world's highest individual wealth.
Musk said in a company statement on Monday that he may expand his investment after pulling out of a deal to enter Twitter's board of directors last week.
One of the lawyers who brought the complaint against Musk, Jacob Walker, said that he hadn't contacted the Securities and Exchange Commission regarding Musk's claimed offenses over his Twitter stake declaration.
