Elon Musk has been sued by Twitter investors for delaying disclosure of his stake in the company, as the Tesla owner made a $44 billion buyout bid for the social media platform.
Investors said Musk saved himself $156 million by not disclosing that he had bought more than 5 percent of it Twitter By March 14th.
Musk continued to buy shares after that, eventually revealing in early April that he owns 9.2% of the company, according to the lawsuit filed Wednesday in San Francisco federal court.
“By delaying the disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter shares at an artificially low price,” said the investors, led by Virginia-based William Hirsniak.
Neither Musk nor his lawyer immediately responded to requests for comment. Twitter declined to comment.
Investors said the recent drop in Tesla stock has put Musk’s ability to fund his Twitter acquisition at “significant risk” as he pledged his shares as collateral to secure the loans he needed to buy the company.
Tesla shares were trading around $700 Thursday, down from over $1,000 in early April.
The Wall Street Journal reported earlier this month that the timing of Musk’s disclosure of his stake had already triggered an investigation by the US Securities and Exchange Commission (SEC).
Musk on Wednesday Pledge An additional $6.25 billion in equity financing to fund his bid on Twitter, indicating that he is working to close the deal despite last week he stipulated his bid on Twitter to provide evidence that spam bots account for less than 5% of its users.
In Wednesday’s lawsuit, the investors demanded a class certificate and an unspecified amount of punitive and compensatory damages.
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