Elon Musk is sued by a Twitter shareholder for failing to disclose that he bought a large position in the company, which affected the company’s share price.
Twitter: Duty to inform the SEC
According to the lawsuit, Musk was required by federal law to notify the U.S. Securities and Exchange Commission (SEC) within ten days of acquiring a 5% stake in Twitter.
Tesla’s CEO has been buying shares since January and bought 5% of the company by March 14, which meant he had to notify the SEC by March 24. According to the SEC’s guidelines, most individuals who acquire a 5% or higher stake in the company must report their ownership in Appendix 13G within ten days of the transaction.
According to the complaint, Musk continued to collect shares even after informing the SEC. On April 4, the SEC issued a document stating that it had bought more than 9% of Twitter’s stock.
As a result, Musk is considered one of the company’s main owners, and its share is higher than that of co-founder and previous Twitter CEO Jack Dorsey. Following the publication of this report, the value of the company’s shares increased by more than 25%.
According to the lawsuit, those who sold their shares at a time when Musk was expected to announce its position lost the stock price gain that resulted from the market reaction and “were harmed.”
As the lawsuit points out, “because Musk did not disclose its ownership, it was able to acquire Twitter shares cheaper” after the March 24 deadline.
Musk became Twitter’s largest shareholder
Musk also recently suggested that prices for Twitter Blue, “should be commensurate with availability & in local currency. Maybe the possibility to pay in the Doge? ” suggested with reference to meme token.
As a result of this report, dogecoin (DOGE), has climbed by as much as 8% and increased its market capitalization by more than $ 1.5 billion in less than an hour.
Finally, in recent weeks, there has been some misunderstanding about Musk’s connection to Twitter. On April 5, it was announced that it would join the board of directors with the intention of making “significant improvements” to this social network.
Looks like Musk got into trouble with this move. Who do you think this dispute has a better chance of winning?