Elon Musk was sued in federal court this week for certain antics of his surrounding his ongoing attempt to purchase Twitter.
The lawsuit, from individuals who’ve invested in Twitter, makes the case that Musk — who acts as though publicly whining on Twitter is his job — manipulated Twitter’s share price to ease the financial impact from the large stock purchases he’s made so far. Musk failed to publicly disclose within 10 days — as required by law — that he’d purchased more than 5 percent of the company’s shares, and he subsequently bought more.
An on-time disclosure could have driven up Twitter’s share price because of the billionaire’s interest in the company driving attention to it. The lawsuit estimates that Musk’s delayed disclosure of his Twitter stake saved him some $156 million. Those behind the case apparently aren’t aiming to stop Musk’s attempted takeover of Twitter, although they are hoping to obtain punitive and compensatory damages, the amount of which wasn’t specified.
The lawsuit also features Twitter itself as a defendant, although the investors aren’t aiming for damages from the company. Instead, those behind the case apparently accuse the company of failing to fulfill obligations to investigate what Musk was doing. “By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the lawsuit states. Per Reuters, Twitter declined to comment on the case, while neither Musk nor his lawyer immediately responded to comment requests.
The U.S. Securities and Exchange Commission (SEC) was already reported to be investigating Musk’s delayed disclosure of his large stake in Twitter. In addition, Musk indicated on his eventual initial disclosure he was a passive shareholder, meaning he — supposedly — harbored no ambitions to either control or influence the company. Predictably, “SEC investigators, who have sought documents from Twitter, are probing whether Mr. Musk’s initial disclosure should have revealed more about his plans for the investment,” The Wall Street Journal summarized, per revelations from sources.
Those behind the new lawsuit against Musk and Twitter also allege the billionaire’s high-profile criticism towards various elements of the company’s operations has been another effort to force Twitter’s stock price downward. Meanwhile, Musk — who remains seemingly committed to the Twitter deal — continues to experience apparent financial turmoil, because he committed a substantial portion of his Tesla holdings as collateral for loans for the Twitter deal — but Tesla’s stock price has been on a substantial downward trend. The price slightly rallied this week, but it’s still down some 34 percent or more over the last six months. There have been repeated recent incidents of Tesla vehicles catching on fire, including one inferno that apparently started while the car was parked. Although there is a mechanical option for opening the doors, fires in Teslas can mean potentially getting temporarily trapped because the electricity normally used for the doors shuts off. And the mechanical option isn’t necessarily obvious, especially in a high-stress situation.