In a lawsuit filed in federal court in Manhattan, shareholders said Musk, CEO of electric car company Tesla Inc (TSLA.O), had made “substantially false and misleading statements and omissions” by failing to disclose that invest in Twitter by March 24, as required by federal law. Shares of Twitter rose 27% on April 4 to $ 49.97 from $ 39.31 after Musk unveiled his share, which investors saw as a vote of confidence from the world’s richest man on Twitter based in San Francisco. Sign up now for FREE unlimited access to Reuters.com Register Former shareholders led by Marc Rasella say the belated revelation allowed Musk to buy more Twitter shares at lower prices, while tricking them into selling at “artificially deflated” prices. The lawsuit seeks unspecified damages and punitive damages. Musk’s lawyer did not comment immediately. Tesla is not to blame. U.S. Securities Act requires investors to disclose within 10 days when they have acquired a 5% stake in a company, which in Musk’s case would be on March 24. read more Twitter announced on April 5 that Musk would become a member of its board, but this week said it had decided not to do so. read more If he does not become a board member, Musk, a productive Twitter user, can continue to buy shares without committing himself to a 14.9% stake in his deal with the company. Some analysts have suggested that Musk could push Twitter to make changes or even seek an unsolicited offer for the company. Rasela said he sold 35 shares of Twitter for $ 1,373, or an average of $ 39.23, between March 25 and 29. Musk is worth $ 265.1 billion, according to Forbes magazine. The case is Rasella v. Musk, U.S. District Court, New York Southern District, no. 22-03026. Sign up now for FREE unlimited access to Reuters.com Register Report by Jonathan Stempel in New York. curated by Richard Pullin Our role models: The Thomson Reuters Trust Principles.
