Elon Musk Sued By Second Group of Twitter Shareholders
Another class-action lawsuit brought against Tesla CEO Elon Musk accuses him of market manipulation and buying stock with insider information.
Another class-action lawsuit by Twitter shareholders was brought against Elon Musk on Wednesday, claiming he broke corporate laws that destabilized Twitter's stock price.
The new suit is similar to a previous class-action lawsuit proposed in April in New York by a Twitter shareholder. Both cases allege the Tesla and SpaceX CEO delayed disclosing his purchase of a 5% stake in Twitter stock in mid-March. While the April lawsuit accuses Musk of violating the US Securities and Exchange Commission's regulations, which would require him to disclose within 10 days, the suit filed Wednesday claims the same disclosure failure is a violation of California corporate law. In so delaying, Musk bought the stock at an artificially lower price and saved $156 million, the suit claims.
The second class-action suit accuses Musk of other legal violations, like not revealing his intention to become a Twitter board member and buying stock based on insider information resulting from conversations with other board members and executives. These include former Twitter CEO Jack Dorsey, who left the board on Wednesday.
Mostly, the suit accuses Musk of acting unlawfully to mitigate financial risk to himself as Twitter's stock price dipped following his attempts to buy Twitter.
"Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter's stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration," the lawsuit reads. "As detailed herein, Musk's conduct was and continues to be illegal, in violation of the California Corporations Code, and contrary to the contractual terms he agreed to in the deal."
Twitter declined to comment on the matter. A representative for Elon Musk didn't respond to request for comment by time of publication.