Elon Musk is being sued by former Twitter shareholders who claim they missed out on the recent jump in its share price because he waited too long to disclose his 9.2pc stake in the social media company.
In a proposed class action filed in Manhattan federal court, the shareholders said Mr Musk made “materially false and misleading statements and omissions” by failing to reveal he had invested in Twitter by March 24, as required under federal law.
Twitter shares rose 27pc on April 4 to $49.97 after Mr Musk disclosed his stake, which investors viewed as a vote of confidence in the company from the world’s richest person.
Former shareholders led by Marc Rasella said the delayed disclosure let the Tesla chief executive buy more Twitter shares at lower prices, while defrauding them into selling at “artificially deflated” prices.
The lawsuit seeks unspecified compensatory and punitive damages. A lawyer for Mr Musk had no immediate comment. Tesla is not a defendant.
Under US law investors are required to disclose within 10 days a stake of 5pc in a company, which in this case would have been March 24.
