Tesla and SpaceX Founder and CEO Elon Musk is being sued by former Twitter shareholders for a delayed disclosure of his stock purchases.
The shareholders claim that they missed out on the opportunity to buy Twitter stocks before the recent price increase as they were not informed that Musk had bought 9.2 percent of the company's shares within an appropriate timeframe.
Tesla and SpaceX CEO Elon Musk
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The affronted shareholders state that they believe Musk made "materially false and misleading statements and omissions" by failing to reveal he had invested in Twitter by the March 24 federal deadline. They are proposing a class action lawsuit against the Tesla and SpaceX chief executive as a result.
Musk and Twitter disclosed the share purchase on April 4, and the Twitter stock price increased from $39.31 per share to $49.97. Market analysts attributed this sudden rise to confidence in Musk's ability to positively affect the direction of the company.
The shareholders suing Musk claimed that he saved $143 million in additional stock purchases between March 24 and April 1 as the stock price remained low in the absence of the information that the world's richest man had bought the social media giant's shares.
Marc Rasella, who is leading the lawsuit, claims that he sold 35 Twitter shares at an average price of $39.23 between March 24 and April 4 when the announcement was made. He claims that since Musk had not disclosed his stock purchases by the federally mandated deadline of March 24, Rasella and others traded their stocks without a full understanding of the company's position.
When Musk's 9.2 percent purchase of the company was announced, Twitter CEO Parag Agrawal had announced that Musk had been offered a board position. However, on the day of his appointment, The Tesla and SpaceX boss declined the post, leaving the board in disarray and forcing Agrawal to make a statement allaying fears of "distractions ahead."
It was recently revealed that Musk is now worth $282 billion, nearly a $100 billion richer than Amazon founder Jeff Bezos.
Edited by Kanishk Singh