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Twitter investors are suing Elon Musk, alleging him of stock manipulation to drive down the price or walk away from the social media platform’s $44 billion takeover bid.
The lawsuit accuses Musk of wrongful conduct for delaying the disclosure of his stake in the company and his “false statements” disparaging the company after proclaiming his bid to take over.
According to the investors, Musk saved $156 million by failing to report that his stake in the company exceeded 5%. Musk then continued to buy stocks after that, eventually revealing that he controlled 9.2% of the firm.
The investors, led by Virginia resident William Heresniak, said, “By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price.”
According to the Wall Street Journal, the timing of Musk’s ownership announcement has already prompted an investigation by the US Securities and Exchange Commission.
The lawsuit also cites Musk’s suspiciously timed claim that Twitter had misrepresented the number of bots on its platform.
The complaint claimed Musk was well aware that Twitter had a certain amount of ‘fake accounts’ and accounts controlled by ‘bots’ and had, in fact, settled a lawsuit based on the fake accounts for millions of dollars.”
“Musk had tweeted about that issue at Twitter several times in the past, prior to making his offer to acquire Twitter with full knowledge of the bots.”
The action claims that Musk was attempting to gain a discount by casting doubt on his commitment and criticizing the corporation, as many people speculated.
The lawsuit claimed, “In doing so, Musk hoped to drive down Twitter’s stock price and then use that as a pretext to attempt to renegotiate the buyout.”
Since Musk declared his intention to buy the company, tech stocks have plummeted, notably Tesla, which accounts for Musk’s fortune.
Following Musk’s remarks, Twitter’s stock plummeted, a scenario the suit claims is “highly unusual” given the company’s agreed-upon takeover price.
Musk has already offered an additional $6.25 billion in equity funding to finance his bid, indicating that he is working to close the purchase, despite his demand for Twitter to produce proof that spambots accounted for less than 5% of its users last week.
The complaint is on behalf of Twitter investors, although any shareholder would be eligible for financial compensation.
It also listed Twitter as a defendant, claiming that the business owed Musk an investigation, though the complainants are not seeking damages from the company.
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
