Twitter investors have launched a lawsuit against Elon Musk over his $44 billion takeover bid, claiming that the billionaire has deliberately manipulated the company’s stock price downward.
The investors claim that Musk saved himself $156 million by failing to disclose that he had already purchased over 5% of Twitter shares before March 14th. The claimants allege that Musk engaged in activity aimed at pushing Twitter’s share price down, before making further purchases which were ultimately disclosed in April.
Public criticism of Twitter by Musk, including a tweet posted on May 13th when he said the takeover bid was “temporarily on hold”, were deliberate attempts to drive the share price down, the claim alleges.
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” said a statement from the investors.
Twitter itself was also named as a defendant in the suit, with the claimants arguing that the company had failed to investigate Musk’s actions. The claim does not seek damages directly from the social media giant.
Musk is already under investigation by the US Securities and Exchange Commission (SEC) over the timing of the disclosure of his stake in Twitter. The SEC requires any investor who buys a stake exceeding 5% in a company to disclose their holdings within 10 days of making the purchase.
Musk has pledged an additional $6.25 billion in equity financing to fund his takeover, indicating that he is still working to complete the deal.