Musk failed to disclose his 5% stake in the social media company when he was required to do so, which is why he is being sued. The delay allowed Musk to buy more shares of Twitter at a lower price and cheat sellers of the stock out of their increased profits, according to the lawsuit.
The lawsuit was filed in Manhattan federal court on Tuesday, on behalf of all investors who sold or otherwise disposed of securities from March 24, 2022, to April 1, 2022, inclusive.
According to the lawsuit, Musk began buying shares in January and by March 14 he had acquired over 5% of the company. The SEC requires investors to file a Schedule 13 within 10 days of passing the 5% threshold. The filing was not submitted until Musk had amassed a 9.1% stake in the micro-blogging site.
The Company's shares rose from a closing price of $39.91 per share on April 1, 2022, to close at $49.97 per share on April 4, 2022.
Musk was able to artificially keep the price of the stock down and buy it at a premium because he kept his stake in the company quiet.
On April 4, it was confirmed that Musk had purchased 9.2% of the company's shares. There was talk of Musk joining the board, but it was reversed earlier this week after Musk questioned whether the company should convert its San Francisco headquarters into a homeless shelter.
US regulators say someone really needs to monitor Elon Musk’s tweets
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