HomeWinBuzzer NewsElon Musk Facing Lawsuit over Artifically Lowering Twitter Share Price

Elon Musk Facing Lawsuit over Artifically Lowering Twitter Share Price

A class-action lawsuit claims Elon Musk purposely delayed announcing his initial 5% stake in Twitter to acquire more shares at a low price.

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is no stranger to controversy. Barely a week goes by without the co-founder and CEO getting into an online fight or landing himself in trouble. We don't normally cover those because they are political and/or pointless. However, in the latest problem to befall Musk, he is being sued for allegedly artificially tampering with 's share price.

Shareholder Marc Rasella is leading a class-action lawsuit against Elon Musk. The group Rasella leads claims Musk withheld his SEC filings revealing his 5% buyout of Twitter longer to keep the share price low.

As the price remained low, he was able to buy up more stock at a lower price. According to the lawsuit, Musk was meant to disclose his share buyout of Twitter in an SEC filing by March 24. By that time he had 5% of the company. This is a mandate from U.S. lawmakers that states investors must disclose a purchase within 10 days if they buy at least 5% of a company.

Low Purchase Price

Musk did not meet this deadline and filed the SEC on April 1. By that time he had bought a further 4.2% of Twitter at the lower price. As well as getting a better deal, Musk also prevented other shareholders from making a profit on an increased price.

This is because when Musk did announce his purchase, Twitter's price grew 27%. It is reasonable to presume this would have happened had he made the announcement on time.

Rasella did sell his Twitter shares during the week before Musk's announcement, getting the average price instead of the higher post-announcement price.

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SourceReuters
Luke Jones
Luke Jones
Luke has been writing about all things tech for more than five years. He is following Microsoft closely to bring you the latest news about Windows, Office, Azure, Skype, HoloLens and all the rest of their products.