The richest man in the world Elon Musk is being sued by Twitter investors for delaying the disclosure of his stake in the company, as the Tesla owner mounts a whopping $44 billion takeover bid for the social media platform, The Guardian reports.
Investors say that Elon Musk saved himself $156 million by failing to disclose that he had purchased more than 5 percent of Twitter by March 14. He continued to buy the stock after that, and it wasn’t until early April that he finally disclosed that he owned 9.2 percent of Twitter, according to the lawsuit.
The lawsuit was filed this week in a San Francisco federal court.
Investors are being led by Virginia resident William Heresniak, who said that by delaying his disclosure of his stake, Musk engaged in market manipulation, and he brought the stock down to an artificially low price.
The recent drop in Tesla stock put Musk’s ability to finance his buyout of Twitter in “major peril,” the investors said because he pledged his shares as collateral to secure the loans needed in order to purchase the platform.
Tesla’s shares went down from $1,000 in early April to about $700 yesterday.
The timing of Musk’s disclosure of his stake in Twitter already triggered an investigation by the U.S. Securities and Exchange Commission (SEC).
This week, Elon Musk pledged an additional $6.25 billion in equity financing in order to fund his Twitter bid, which is a sign that he is working to complete the deal, despite many rhetorical cop-outs to seemingly bail on the buyout. Even last week, he conditioned buying Twitter unless the company presented proof that spambots accounted for less than 5 percent of its users.
In the new suit filed this week, the investors asked to be certified as a class and asked to be awarded an unspecified amount of punitive and compensatory damages for Musk’s failures.