Elon Musk Seeks Dismissal of Lawsuit by Former Twitter Shareholders

Elon Musk has filed a request to dismiss a lawsuit by former Twitter shareholders who allege that he delayed disclosing his substantial ownership stake in the social media company in early 2022. Musk claims the delay was a mistake rather than an attempt to defraud shareholders.

Background of the Lawsuit:

Former Twitter shareholders, represented in a proposed class action by an Oklahoma public pension fund, assert that Musk and his wealth manager, Jared Birchall, were aware of a U.S. Securities and Exchange Commission (SEC) rule requiring disclosure by March 24, 2022, once Musk’s ownership reached 5%. However, Musk waited until April 4, 2022, to reveal his 9.2% stake.

Allegations and Financial Impact on Elon Musk:

The lawsuit claims Musk’s delay allowed him to purchase additional Twitter shares at lower prices, saving more than $200 million. After announcing his 9.2% stake, Twitter’s stock price surged by 27%.

In his recent filing in Manhattan federal court, Musk argues that the delay in disclosure was not intentional. He stated that he initially planned to disclose his stake at the end of 2022 but revealed it earlier upon realizing his misunderstanding of the SEC rule.

Musk describes the situation as a mistake rather than a fraudulent scheme, emphasizing that there is no evidence he intended to deceive shareholders.

Denial of Conspiracy Claims:

Musk also refutes the investors’ claim that an unnamed Morgan Stanley banker helped him devise a strategy to acquire Twitter shares without alerting the market.

Last September, U.S. District Judge Andrew Carter refused to dismiss an earlier version of the lawsuit, citing evidence that Musk understood the SEC disclosure rules and testified about them under oath.

The SEC has also investigated Musk’s Twitter stock purchases. Lawyers for the investors have not yet commented on Musk’s recent filing.