Twitter Contributor Mark Bean Rasella suede Elon Musk On Tuesday, accusing the billionaire of failing to disclose his Twitter stake within the timeframe required by the US Securities and Exchange Commission (SEC). The move allegedly helped Musk save nearly $143 million in subsequent stock purchases, according to the lawsuit. Rasella, who aims to represent all investors who sold their shares on Twitter during the week of March 24 to April 1, filed the lawsuit in the US District Court for the Southern District of New York.
The lawsuit argues that Musk, Tesla’s CEO and chief shareholder at Twitter, violated a securities law requiring shareholders to alert the SEC within 10 days after they crossed the company’s 5% ownership threshold by filing his disclosure too late. Rasella’s lawsuit alleges that Musk’s investment on Twitter exceeded 5% by March 14, but that he continued to buy Twitter shares at about $39 a share and did not disclose his stake until last Monday. At that point, it was revealed he had a 9.2% stake — or 73.5 million shares — in the social media company. On the day Musk disclosed his stake in Twitter, the company’s stock price rose nearly 27%.
Rasella’s lawsuit argues that the delay may have hurt the portfolios of Twitter shareholders who sold their shares during the March 24 to April 1 time frame, while also allowing Musk to continue buying shares at an artificially discounted price. “Investors who sold Twitter shares between March 24, 2022, when Musk was asked to disclose his Twitter ownership, and prior to the actual disclosure on April 4, 2022, missed the resulting increase in the share price as the market reacted to Musk’s purchases and was hit by it,” it reads. lawsuit. In the filing, Rasella, who sold Twitter shares within the time frame in question, accuses Musk of “making false and materially misleading statements and omissions by failing to disclose to investors that he acquired a 5% ownership interest in Twitter as required.”
Musk spokesmen did not immediately respond Vanity FairRequest for comment via email.
Many legal and securities experts seem to agree that the late filing potentially netted Musk an estimated $156 million, according to Washington Post. also, Alon Cabin, A corporate attorney for law firm Farrell Fritz said in a statement to CNBC that Musk had given himself “an additional 10 days to purchase additional shares (increasing his ownership over that period by an additional 4.1%) before — the price hike that occurred when he finally announced his holdings on April 4th.”
If the allegations are proven, it wouldn’t be the first time the world’s richest man has appeared to disregard SEC regulations. In 2018, Musk faced charges of securities fraud after he shared plans to make Tesla private in a tweet that included the “420” joke. He then entered into a consent decree with the Securities and Exchange Commission agreeing to pay a $20 million fine and step down as Tesla’s chairman. As part of the “misleading tweets” settlement, the Securities and Exchange Commission asked Tesla to review future Musk tweets about the company. However, Musk allegedly violated this requirement in early 2019 by sharing a tweet about Tesla’s production plans that year. (Several months after the 2019 tweet, the parties agreed to a revised settlement regarding the Tesla chief’s social media habits.) In response to those incidents, Musk accused the agency of subjecting him to “endless and baseless investigations.”
After Musk was revealed as Twitter’s largest new shareholder last week, the social media company offered him a seat on the board. But in an abrupt turnaround, Musk rejected the board’s offer, opting instead to enjoy an obligation-free position where he cannot be forced to act – or tweet – for the benefit of Twitter or its shareholders. Instead, the 50-year-old spent the rest of the weekend going into “goblin mode,” pondering a series of now-deleted tweets about turning Twitter’s San Francisco headquarters into a homeless shelter and polling his 81 million followers on whether Twitter’s name should have been changed to “Laughter”. Musk’s abdication of Twitter’s board of directors also means that he can buy more than the 9.2% of the stake he currently holds in Twitter, with the option to acquire a majority stake in the company.
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