Elon Musk has made another enemy, this time a disgruntled Twitter shareholder who says he suffered losses after Musk failed to punctually inform investors that he had acquired a 9.2 percent ownership stake in Twitter.
The lawsuit, filed in federal court in the Southern District of New York on Tuesday, alleges that the Tesla CEO’s delay artificially dampened Twitter’s share price, cheating out investors who sold stock before he finally disclosed his investment in early April.
The plaintiff, Marc Bain Rasella, claims that Musk should have revealed his holdings to the U.S. Securities and Exchange Commission by March 24, when he crossed the 5 percent ownership stake that requires disclosure, as Bloomberg News previously reported. Instead, the billionaire revealed that he had bought up 9.2 percent of Twitter only last Monday—immediately causing shares to jump 27 percent as Muskian acolytes clamored to invest.
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Meanwhile, according to Rasella’s complaint, in dragging his feet to file, Twitter’s most notorious troll managed to scoop up more shares at a deflated price.
A finance professor cited by The Washington Post last week estimated that Musk made $156 million by buying at the lower price.
Rasella purports to represent the class of Twitter’s shareholders who sold their stakes in the week before Musk’s disclosure.
Neither Musk nor Rasella immediately responded to requests for comment.
Musk has caused turmoil at Twitter in recent weeks. Following news of his investment, he agreed to accept a seat on the company’s board through a deal that would have prevented him from owning more than 14.9 percent of Twitter’s stock.
Then, last week, he continued to troll and criticize the company, asking his more than 81 million followers if the platform was “dying,” suggesting that it should modify its paid subscription tier, and mulling about whether its headquarters should be converted into a homeless shelter (he has since deleted the latter tweet).
On Sunday night Twitter’s CEO, Parag Agrawal, abruptly declared that Musk would not join the company’s board after all.
“Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board. I believe this is for the best,” he wrote.
Agrawal cryptically noted that Musk had needed to complete a background check to formally assume the role and would have had to act as a company fiduciary and “act in the best interests of the company and all our shareholders.” Those comments have stirred speculation about why Musk changed course and whether it was truly his decision.
On Sunday, with the internet set ablaze over news of the reversal, Musk simply tweeted out a version of this emoji: 🤭.
The billionaire has repeatedly battled with the Securities and Exchange Commission since 2018, when he caught Tesla investors by surprise and tweeted that he was considering taking the electric carmaker private at a price of $420 per share.
The agency launched an investigation into the matter and determined that Musk had omitted key details about whether he really had the “funding secured,” as his tweet said. Musk eventually settled the matter, though it cost him his job as Tesla’s chairman and $20 million in fines, among other stipulations.
Read it at Bloomberg News
