A Twitter investor has filed a lawsuit against billionaire Elon Musk in federal court in Manhattan.
The investor launched the federal securities class action complaint because Musk neglected to declare his 5% investment in the social media company when he was required to do so.
The suit was filed by Marc Bain Rasella, a Twitter investor, for and on behalf of “all investors who sold or otherwise disposed of Twitter Inc. securities between March 24, 2022, and April 1, 2022, inclusive.”
According to the lawsuit’s facts, Elon Musk began buying Twitter shares in January and by March 14 had obtained over 5% ownership in the company.
Investors must submit a Schedule 13 with the Securities and Exchange Commission (SEC) within 10 days of exceeding the 5% threshold. Musk reportedly did not file the paperwork until he had amassed a 9.1% interest in Twitter.
“When Musk finally filed the required Schedule 13, revealing his ownership stake in Twitter, the Company’s shares rose from a closing price of $39.91 per share on April 1, 2022, to close at $49.97 per share on April 4, 2022 — an increase of approximately 27 percent,” according to an excerpt from the lawsuit.
According to the suit, the delay allowed Musk to buy more shares of Twitter at a lower price and cheat sellers of Twitter stock out of increased profits.The plaintiff maintained that by keeping his growing stake in Twitter quiet, Musk was able to artificially keep the price of the stock down and buy it at a premium.