Elon Musk has been filed with a lawsuit by Twitter investors for failing to disclose that he had bought a substantial stake in the company.
- READ MORE: Grimes – ‘Miss Anthropocene’ review: an iconoclast continues to march to the beat of her own drum
The Tesla chief revealed on April 4 that he had acquired a 9.2 per cent stake in the social media platform.
Shares in Twitter soared as investors viewed the move as a vote of confidence, according to The Guardian.
But federal trade laws require that investors notify the US Securities and Exchange Commission (SEC) after surpassing a 5 per cent stake in a company within 10 days. Musk acquired his shares on 14 March but did not make that public until over two weeks later.
A new lawsuit filed in New York yesterday (April 12) alleges, in the time between passing the 5 per cent threshold and publicly reporting, Musk was able to buy up additional shares at a deflated price.
Experts estimate that the delay may have resulted Musk netting $156million (£120million), according to The Washington Post.
The lawsuit seeks class action status on behalf of investors who sold Twitter stock during that time who claim they lost out on gains they would have been aware of had Musk disclosed his stake earlier.
After Musk disclosed his stake, Twitter shares rose 27 percent from $39.31 to $49.97. The plaintiff in the suit allegedly sold 35 Twitter shares for $1,373 (£1,056) or an average price of $39.23, before Musk revealed his investments.
The lawsuit is seeking a jury trial for unspecified compensatory and punitive damages.
His appointment was due to take effect over the weekend but the company’s chief executive Parag Agrawal announced that Musk “has decided not to join our board”.
Musk has had a muddied history with Twitter. In December, after it was announced that Agrawal was taking over from Dorsey as Twitter’s CEO, Musk posted a meme showing Agrawal as Soviet dictator Joseph Stalin and Dorsey as Soviet secret police head Nikolai Yezhov being shoved into water.
And earlier this year, he criticised Twitter’s announcement about NFT profile pictures, calling it “annoying”.