Tesla, SpaceX, and Twitter CEO Elon Musk has asked a US judge to dismiss a lawsuit alleging that his late disclosure of a major stake in Twitter Inc. harmed the social media company’s shareholders last 12 months.
Led by the Oklahoma Firefighters Pension and Retirement System, the investors have accused Elon Musk of going past the SEC’s deadline to reveal his purchase of Twitter stock. For this reason, the investors alleged that some shareholders ended up selling Twitter stock at artificially low prices because they weren’t aware of Musk’s stake.
The shareholders claimed that by adding to his holdings and secretly meeting with the social media company’s executives before disclosing his 9.2% stake, Elon Musk saved over $200 million. The investors further claimed that Musk’s late disclosure denied stock sellers and options traders the complete value of their securities.
Musk, for his part, noted in a filing that the investors within the proposed class motion wouldn’t have an independent right to receive damages under the SEC disclosure rule. Musk also argued that the investors couldn’t prove that every one class members relied on his silence before making their respective Twitter trades on the time.
Musk also argued that despite a “laundry list” of accusations that suggested that an intent to defraud was present, “probably the most compelling inference is that any failure to reveal was inadvertent,” as noted in a Reuters report.
As per SEC regulations, investors must disclose their acquisition of 5% of an organization inside ten days. For Elon Musk’s investment in Twitter, this disclosure deadline would have meant that the CEO must have gone public along with his stake on March 24. Musk, nevertheless, didn’t report back to the SEC until April 4, effectively missing the regulatory agency’s deadline by over per week.
On the time of his disclosure, Musk’s stake on Twitter stood at 9.2%. Following Musk’s disclosure, Twitter shares rose 27%, from $39.31 to $49.97 per share.
Don’t hesitate to contact us with news suggestions. Just send a message to firstname.lastname@example.org to provide us a heads up.