Musk's purchase of Twitter stock looks to be in hot water.
The lawsuit accuses Musk of costing shareholders money and saving money.
The lawsuit was filed in a New York federal court on April 12 and highlights Musk's apparent failure to report his March 14 share purchase to the SEC within 10 days.
The suit alleges that Musk made false and misleading statements to investors about his ownership stake in the company.
It says that anyone who sold shares between March 24 and April 4 lost out on gains because the purchase became public.
The boss of both companies gained in the region of 143 million dollars during the 11-day period when he purchased more stock in the company at a depressed price, a move that saw him become the company's largest shareholder with a 9.2% stake.
The lawsuit seeks class action status on behalf of the investors who sold stock during the crucial 11-day period, and who would have benefited from Musk's disclosure of his investment within the required time frame. The action wants a jury trial for the damages.
When it came to light last week, Musk's investment in the company caused a stir because he is a long-time critic of the company and has more than 80 million followers on the platform.
Musk was offered a seat on the board by the company, but he turned it down the same day as the appointment was due to take effect. Musk's change of heart was only announced on Monday, after a weekend in which he fired off a bunch of now- deleted messages suggesting various ideas from the serious to the absurd.
The SEC has yet to make a public comment on whether it will take action against Musk for failing to disclose his stock purchase.
Representatives for Musk did not comment on the lawsuit. Musk hasn't commented on it yet.
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