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Another shareholder lawsuit against Musk over Twitter turmoil

admin by admin
May 30, 2022
in IT news
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Another shareholder lawsuit against Musk over Twitter turmoil
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San Francisco Elon Musk has another shareholder lawsuit on his neck for alleged violations of the law when he joined Twitter and the planned takeover of the short message service. Among other things, a US shareholder accuses the tech billionaire of having saved a lot of money at the expense of shareholders by violating information obligations when buying up Twitter shares. Other lawsuits with such allegations against Musk had already been launched in April. US law firms are preparing further proceedings.

But the new legal dispute goes beyond the accusation that Musk did not comply with legal reporting deadlines for his Twitter investment. The plaintiff also accuses the star entrepreneur of sending Twitter’s shares plummeting with his comments after the deal was completed. The lawsuit, launched on Wednesday on behalf of a shareholder from the state of Virginia, is designed as a class action that other investors can join.

Musk has not yet commented on the allegations. Particularly explosive is the accusation that he ignored stock exchange rules when entering Twitter as a major investor. For larger holdings in US companies, strict regulations apply: if they exceed the threshold of five percent, this must be made public within ten days by mandatory notification. However, Musk exceeded this deadline by eleven days, according to the lawsuits.

This may seem like a small omission at first, but there is a lot of money involved. Because Musk’s entry had initially caused the stock to rise sharply. Since he did not disclose his investment in time, he was still able to buy shares cheaply, according to the plaintiffs. Investors who sold during this time were disadvantaged. The latest lawsuit accuses Musk of saving $156 million through the delayed mandatory notification.

Plaintiff lawyers accuse Musk of market manipulation and securities fraud. A number of major US law firms, including Hagens Berman – known for example through “Dieselgate” class actions against Volkswagen – have been gathering clients against Musk for weeks. For the Tesla BOSS, his controversial approach to Twitter could also lead to even more supervisory anger. According to media reports, US authorities such as the SEC and the Trade Commission FTC are also investigating Musk.

But in the meantime, it’s no longer just a matter of whether everything went right with Musk’s entry. After agreeing to a takeover with Twitter, his comments caused further course turbulence. For example, Musk sharply criticized the company, and then even declared the deal suspended, suspecting that the share of spam and bot accounts was higher than Twitter stated. As a result, the stock fell sharply in value at times. The lawsuit now also blames Musk for the price slide.

However, from Twitter’s point of view, the tech billionaire cannot unilaterally put the agreement on hold. The Board of Directors is determined to complete the transaction for the agreed $ 54.20 per share. A shareholder vote is still pending. The latest shareholder lawsuit is also directed against Twitter. The Group is accused of breaches of duty in connection with Musk’s actions, but there are no claims for damages here.

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