Ilona Maska’s Twitter profile, shown on a computer screen, and the Twitter logo displayed on the phone screen, can be seen in this illustration made in Krakow, Poland on April 9, 2022.
Jakub Porzycki | Nurfota | Getty Images
A group of Twitter shareholders is suing Ilona Maska for allegedly not disclosing that he bought a significant stake in the social media company on time.
The CEO of Tesla and SpaceX revealed on April 4 that he had amassed 9.2% of Twitter’s shares, which led to a rise in shares as investors viewed the move as a vote of confidence.
But its disclosure may have been too late.
Federal trade laws stipulate that investors must notify the Securities and Exchange Commission within 10 days if they acquire more than 5% of the company’s stock.
Musk, who began buying Twitter shares in January, allegedly reached that milestone on March 14, meaning he had to inform the SEC by March 24.
A spokesman for Musk, the world’s richest man, did not immediately respond to CNBC’s request for comment.
A lawsuit filed Tuesday in New York by law firm Block & Leviton on behalf of several Twitter shareholders alleges that Musk was able to buy more Twitter shares at a deflated price between crossing the 5% threshold and publicly disclosing his stake. .
Half a dozen legal and securities experts told The Washington Post that the delay may have helped Mask earn $ 156 million.
Shares of Twitter rose 27% on April 4 after it became known that Musk had amassed a 9.2% stake worth nearly $ 3 billion.
The group case was filed on behalf of investors who claim they lost potential profits they could have realized if Musk had previously disclosed his stake.
“Elon Musk seems to have missed the relevant 10-day filing deadline under sections 13 (d) and 13 (g) of the Securities Act of 1933 to report 5% ownership in a public company,” Alon Copen said. A corporate lawyer.A transaction lawyer with Farrell Fritz, according to a statement released from CNBC.
“This gave him an extra 10 days to buy additional shares (he increased his ownership during that time by an additional 4.1%) before the share price jump that occurred when he finally announced his holdings on April 4,” Copen added. .
After revealing his stake in Twitter, Musk revealed that he also intends to take a seat on the company’s board. However, for undisclosed reasons, he decided not to take a seat.