Twitter shareholder sues Elon Musk for ‘manipulating’ the company’s stock

A new lawsuit on behalf of Twitter shareholders was filed against Elon Musk in federal district court in San Francisco on Wednesday night, alleging that the Tesla CEO has actively manipulated the company’s stock for personal gain.

The complaint focuses on Musk’s conduct since signing the purchase agreement with Twitter’s board on April 25th, particularly his recent statement that the deal “cannot move forward” without more information about automated accounts on the platform.

After signing the agreement, the complaint alleges, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price.”

“Musk’s conduct was and continues to be illegal”

“As detailed herein, Musk’s conduct was and continues to be illegal, in violation of the California Corporations Code, and contrary to the contractual terms he agreed to in the deal,” the complaint continues.

Twitter shareholders that sold stock between March 24 and April 1. The complaint stated that Musk waited days to declare his investments of more than a 5% stake. By not disclosing the purchases, Musk is able to keep the price of the stock low and buy it at a premium, the complaint said.

Earlier this month, Musk had acquired a total of 9.2% stake in Twitter, becoming its largest shareholder before then declining a seat on its board of directors. Musk had failed to file paperwork for purchasing more than 5% of his stake in Twitter. 

“Musk was motivated to delay his Schedule 13 filing. By failing to disclose his ownership stake via Schedule 13, Musk was able to acquire shares of Twitter less expensively during the Class Period,” the complaint said.

According to the lawsuit, Musk began buying Twitter shares in January. By March 14, he had surpassed a 5% ownership in Twitter. Musk did not submit this filing until he already acquired a 9.1% stake in the company, the complaint noted.

Earlier this month, Musk said he was putting the Twitter acquisition “on hold” to learn more about inauthentic activity on the platform, including information about fake or automated accounts.

The shareholders’ complaint added that his gripes about “bots” were part of a scheme to negotiate a better price or kill the deal.