Twitter Investors Sue Elon as the Twitter Takeover Plot Thickens
Even the richest man in the world is looking for a discount.
In a new lawsuit, Twitter shareholders are suing Elon Musk, alleging that he manipulated the price of the company’s stock for his own benefit in the course of agreeing to buy the company.
The lawsuit represents a group of Twitter investors but would allow any shareholders to receive financial compensation.
The case alleges he violated California corporate laws in a number of ways.
It accuses the Tesla boss of "wrongful conduct" as his "false statements and market manipulation have created 'chaos' at Twitter's headquarters in San Francisco".
Twitter shares are around 27% lower than Mr Musk's $54.20 offer price.
The proposed class action lawsuit was filed this week at the US District Court for the Northern District of California by investor William Heresniak, who said he was acting "on behalf of himself and all others similarly situated".
The investors said Musk saved himself $156 million by failing to disclose that he had purchased more than 5% of Twitter by March 14. They asked to be certified as a class and to be awarded an unspecified amount of punitive and compensatory damages.
They also named Twitter as a defendant, arguing the company had an obligation to investigate Musk's conduct, though they are not seeking damages from the firm.
Tesla has recovered some of its value, but Twitter has continued trading well below the deal’s $54.20 agreed-upon price point, which suggests that Wall Street still has doubts that Musk will buy Twitter for $44 billion.