Billionaire Elon Musk was sued on Tuesday (April 12) by former Twitter shareholders who said they missed the latest stock price because he was waiting too long to disclose 9.2 percent of the communications company.
In a proposed class decision filed in a Manhattan corporate court, shareholders said Mr Musk, chief executive of the electric car company Tesla, had made "false and misleading statements and resignations" by failing to disclose that he had invested in Twitter on March 24 as required. under federal law.
Twitter shares rose 27 percent on April 4, reaching US $ 49.97 from US $ 39.31, after Mr Musk unveiled his stake, which investors see as the confidence of the world's richest man on Twitter.
Former shareholders led by Mr Marc Rasella say the delayed disclosure allows Mr Musk to buy more Twitter shares at lower prices, while cheating them to sell them at "automatically reduced" prices.
The case seeks compensation and penalties for unspecified damages.
Mr Musk's lawyer did not immediately comment. Tesla is not a defendant.
Mr Rasella said he had sold 35 shares of Twitter for US $ 1,373, or an average price of US $ 39.23, between March 25 and 29.
U.S. safety law requires investors to disclose within 10 days of receiving 5 percent of the company, which would be March 24 in Mr. Musk's case.
Twitter announced on April 5 that Mr Musk would join the board of directors, but this week he said he had decided not to.
By not going to the board, Mr Musk, who is an active Twitter user, could continue to buy shares without being bound by his contract with the company to reduce his value to 14.9 percent.
Some analysts have suggested that Mr Musk could press Twitter to make changes, or pursue an unsolicited bid for the company.
Mr Musk is worth US $ 265.1 billion (S $ 361.7 billion).
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Courtesy Grizler.com
