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Is Musk Ending the Lawsuit Over Twitter Disclosure?

Musk Wants to End Lawsuit Over Delayed Twitter Disclosure


Lawsuit Over Twitter

Elon Musk wants to dismiss a lawsuit by former Twitter shareholders. They said he waited too long in early 2022 to reveal his large stake in the social media company, Twitter. Musk said that his delay was a mistake.


In a court filing on Wednesday night in Manhattan, Musk said it was hard to believe he wanted to deceive shareholders. These shareholders didn't know he owned 9.2% of Twitter and sold their stocks, missing out on big gains.


The investors claimed Musk and his wealth manager, Jared Birchall, knew they had to disclose by March 24, 2022, that Musk had bought 5% of Twitter. Instead, they waited another 11 days. This delay allowed Musk to buy more shares at lower prices, saving over $200 million. Twitter's stock price rose by 27% on April 4, 2022, after Musk revealed his 9.2% stake.


Musk, the world's richest person according to Forbes, also runs companies like Tesla. In his filing, Musk said he intended to reveal his Twitter stake at the end of 2022. He disclosed it earlier after realizing he misunderstood the SEC rule.


"This is not a scheme to defraud," Musk said. "All indications point to a mistake."

Musk also denied the investors' claim that a Morgan Stanley banker secretly helped him buy Twitter shares.


Lawyers for the investors, led by an Oklahoma public pension fund, did not comment on Friday. Musk bought Twitter, now known as X, for $44 billion in October 2022. The SEC also investigated his Twitter stock purchases.


Last September, Judge Andrew Carter refused to dismiss an earlier version of the lawsuit. He found evidence that Musk understood the SEC disclosure rule and testified about it under oath.


The case is Oklahoma Firefighters Pension and Retirement System v. Musk et al, in the U.S. District Court, Southern District of New York, No. 22-03026.


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Key Points


  1. Musk Admits Mistake: Elon Musk acknowledges that his delay in revealing his large ownership stake in Twitter was a mistake, not an attempt to deceive shareholders.

  2. Lawsuit Over Disclosure Delay: Former Twitter shareholders sued Musk, claiming his late disclosure allowed him to buy more shares at lower prices, saving over $200 million.

  3. SEC Rule Misunderstanding: Musk intended to reveal his stake at the end of 2022 but disclosed it earlier after realizing he misunderstood the SEC's disclosure rule.



FAQs

Q1: Why did Elon Musk delay revealing his Twitter ownership?

Elon Musk said the delay was a mistake. He misunderstood the SEC's rule about when to disclose his ownership. He planned to reveal it at the end of 2022 but did so earlier when he realized the error.


Q2: What is the lawsuit about?

Former Twitter shareholders sued Musk, claiming he waited too long to disclose his ownership. They believe this allowed him to buy more shares at lower prices, costing them money.


Q3: How much money did Musk save by delaying the disclosure?

The investors claim that Musk saved over $200 million by delaying the disclosure, as he bought more shares at cheaper prices before the news became public.


Q4: What did the judge decide about the lawsuit?

Last September, Judge Andrew Carter refused to dismiss the lawsuit. He found evidence that Musk understood the SEC disclosure rule and testified about it under oath.


Q5: Did Musk try to deceive shareholders?

Musk denies trying to deceive shareholders. He claims all indications, including the court filings, show the delay was a mistake, not a scheme to defraud.


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