Elon Musk is being sued by a Twitter (NYSE: TWTR) shareholder for neglecting to disclose that he had purchased a large position in the firm, which had an influence on the company’s stock price.
According to the lawsuit papers, Musk was obligated by federal law to inform the US Securities and Exchange Commission (SEC) within ten days after acquiring a 5% interest in Twitter.
The Tesla CEO had been buying shares since January and had purchased 5% of the company by March 14, which meant he had to inform the SEC by March 24. Most persons who acquire a stake of 5% or more in a corporation are required to report their ownership in a Schedule 13G filing within ten days after the transaction, according to SEC guidelines.
Per the complaint filing, Musk continued to collect shares after informing the SEC. On April 4, the SEC issued a document stating that he had bought more than 9% of Twitter’s stock.
Due to this, Musk is considered to be one of the company’s major owners, with a stake higher than that of Twitter’s co-founder and previous CEO, Jack Dorsey. After the news was made public, the value of the company’s stock increased by more than 25%.
Sellers lose out on stock gain
According to the lawsuit, those who sold their shares during the time when Musk was expected to announce his position lost out on the share price gain that resulted from the market response and “were damaged thereby.”
As the complaint points out, “by failing to disclose his ownership stake, Musk was able to acquire shares of Twitter less expensively” during the period after the March 24 deadline.
DOGE spikes Musk becomes largest Twitter shareholder
The billionaires’ favorite cryptocurrency, Dogecoin (DOGE), climbed as a result of the news soaring as high as 8% on the day, adding more than $1.5 billion to its market cap in less than one hour.
Musk also recently proposed that pricing for Twitter Blue, “should be proportionate to affordability & in local currency. Maybe even an option to pay in Doge?” he suggested, referring to the meme token.
Finally, there has been some misunderstanding about Musk’s connection with Twitter over the past couple of weeks. On April 5, it was announced that he would be joining the board of directors intending to make “significant improvements” to the social networking site.