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Twitter Investor Sues Elon Musk for Hiding Investment

Twitter Investor Sues Elon Musk for Hiding Investment 

  • A Twitter shareholder is suing Elon Musk for failing to disclose that he had purchased a substantial stake in the company
  • The investor alleges that Musk took too long to reveal his 9.2% stake in the company, and manipulated the price of shares
  • The federal trade laws currently require that investors notify the Securities and Exchange Commission (SEC) after taking more than a 5% stake in a company

A class-action lawsuit has been issued against Tesla CEO, Elon Musk after a Twitter shareholder alleged that he failed to disclose his 5% stake in the social media company.

Elon Musk

The investor claims that the delay allowed Musk to buy more shares of Twitter at a lower price and cheat sellers of the stock out of more profit.

The lawsuit was filed in Manhattan federal court on Tuesday by one Marc Bain Rasella, on behalf of investors that sold Twitter securities between March 24, 2022, and April 1, 2022.

The lawsuit claims that Musk began acquiring Twitter shares in January and by March 14, he had acquired over 5% ownership in the social media giant.

The federal trade laws currently require that investors notify the Securities and Exchange Commission (SEC) after taking mods than a 5% stake in a company. The billionaire however did not do so till he amassed a 9.1% stake in the company.

Read also: Elon Musk Rejects Twitter Board Offer in Shocking U-turn

By the time Musk revealed his ownership stake in Twitter, the company’s stock surged from a closing price of $39.91 per share on April 1, 2022, to close at $49.97 per share on April 4.

The plaintiff claims that by keeping his increasing stake in Twitter Inc from the public, Elon Musk kept the price down and bought at a discount.

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