Elon Musk is being sued over the way he bought $2.9 billion in Twitter shares

Elon Musk
Elon Musk (Image credit: Recode)

What you need to know

  • Tesla CEO Elon Musk is facing a lawsuit over the late disclosure of his Tesla stock buy.
  • Musk should have filed forms to say he had bought 5% of Twitter stock, but didn't.
  • A Twitter shareholder believes Musk cost existing shareholders money when they sold their shares without knowing the news.

Tesla CEO Elon Musk has found himself on the receiving end of a federal lawsuit after his failure to correctly disclose his purchase of Twitter shares, potentially impacting the finances of other shareholders.

The suit, filed yesterday in the U.S. Southern District of New York, claims that Musk was 10 days late when filing the required form that would confirm his stock buy. That form should have been completed after he held more than 5% of Twitter shares on March 24 — but it wasn't filed until April 4. The news of Musk's investment in Twitter say share prices rise 24%, reports Variety.

Now, Twitter shareholder Marc Bain Rasella believes that those who sold stock between the two dates were shortchanged because the stock price would have been higher had Musk filed the paperwork on time.

"Defendant Musk, because of his position as a 5% owner in Twitter, had an obligation to file a Schedule 13 with the SEC. Defendant had the obligation, ability, and opportunity to prevent the issuance of the false statements and omissions alleged herein," the suit states. "Because of his position as a 5% owner in Twitter, and access to material non-public information available to himself but not to the public, Defendant Musk knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the omissions being made were false and misleading."

This is just the latest in an ongoing farce that saw Musk announced as being Twitter's newest board member following the $2.9 billion stock buy. Then, Musk went on a tweeting spree that, among other things, asked whether Twitter was dying. Then came the news that the outspoken Tesla man wouldn't be joining the board after all.

Oliver Haslam

Oliver Haslam has written about Apple and the wider technology business for more than a decade with bylines on How-To Geek, PC Mag, iDownloadBlog, and many more. He has also been published in print for Macworld, including cover stories. At iMore, Oliver is involved in daily news coverage and, not being short of opinions, has been known to 'explain' those thoughts in more detail, too. Having grown up using PCs and spending far too much money on graphics card and flashy RAM, Oliver switched to the Mac with a G5 iMac and hasn't looked back. Since then he's seen the growth of the smartphone world, backed by iPhone, and new product categories come and go. Current expertise includes iOS, macOS, streaming services, and pretty much anything that has a battery or plugs into a wall. Oliver also covers mobile gaming for iMore, with Apple Arcade a particular focus. He's been gaming since the Atari 2600 days and still struggles to comprehend the fact he can play console quality titles on his pocket computer.