The Tesla boss is said not to have made his Twitter involvement public in time.
(Photo: Reuters)
new York Tesla boss Elon Musk is threatened with legal trouble after joining Twitter as a major investor. A shareholder of the company on Tuesday launched a potential class-action lawsuit against the multi-billionaire in a court in New York over alleged securities fraud. This was announced by the competent law firm.
The plaintiff accused Musk of not making his Twitter investment public within the statutory reporting period. As a result, a stock market reaction was delayed and the share price was kept artificially low while he continued to expand his stake. Musk did not initially comment on the lawsuit.
Strict regulations actually apply when holdings in US companies exceed the five percent threshold. On April 4, Musk announced in a mandatory notification to the SEC that he held a good nine percent stake in Twitter. This news caused the share price to rise sharply.
But according to the lawsuit, Musk’s stake was already over five percent in mid-March – without being reported within ten days by the deadline. As a result, Musk was able to continue buying cheap Twitter shares until the April 4 announcement. Investors who sold during this period were disadvantaged.
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