'Twitter's Largest Shareholder' Musk Faces Class Action Lawsuit for Delayed Disclosure of Stake Acquisition

by Kim Bokyung

Published 13 Apr.2022 18:17(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Elon Musk, CEO of Tesla and emerging as the largest shareholder of Twitter, has been sued collectively by other shareholders for allegedly delaying the disclosure of his Twitter stake acquisition, according to major foreign media reports on the 12th (local time).

Musk revealed on the 4th that he held a 9.1% stake in Twitter.

Twitter shareholders filed a complaint in the U.S. District Court in Manhattan, New York, claiming that Musk was required to disclose his investment in Twitter by March 24th under U.S. securities law but failed to do so on time, committing securities fraud and demanding damages.

They stated that Musk’s delay in disclosure allowed him to purchase Twitter shares at a lower price, while they sold their shares at an 'artificially low price.'

According to U.S. securities law, an investor acquiring more than 5% of a company's shares must disclose this within 10 days. The disclosure deadline for Musk’s Twitter stake acquisition was March 24th.

Lead plaintiff Mark Rasella said he sold 35 Twitter shares between March 25th and 29th at $1,373 total. The average sale price per share was $39.23.

On the 4th, when Musk disclosed his stake acquisition, Twitter’s stock price jumped 27%, from $39.31 to $49.97.