In a recent filing in Manhattan federal court, X chairman Elon Musk has requested for the dismissal of a lawsuit brought by former Twitter shareholders who allege that Musk delayed revealing his substantial ownership stake in the social media company in early 2022.
Musk argued that “all indications” point to his delay being an unintentional mistake rather than an attempt to defraud shareholders.
The proposed class action lawsuit claims that Musk and his wealth manager, Jared Birchall, were aware of the US Securities and Exchange Commission (SEC) rule requiring Musk to disclose his 5% stake in Twitter by March 24, 2022. However, they waited an additional 11 days to do so.
The investors argued that this delay allowed Musk to purchase more shares at lower prices, resulting in savings of over $200 million. Following Musk’s disclosure of his 9.2% stake on April 4, 2022, Twitter’s stock price surged by 27%.
In his defense, Musk said that he had planned to disclose his Twitter stake at the end of 2022 but promptly revealed it upon realizing he had misinterpreted the SEC disclosure rule.
“This is not a scheme to defraud,” Musk said. “All indications–including those in the pleadings–point to mistake.”
Musk also refuted the investors’ claim that an unnamed Morgan Stanley banker assisted in developing a trading strategy to accumulate Twitter shares without alerting the broader market.
Last September, US District Judge Andrew Carter declined to dismiss an earlier version of the lawsuit, citing evidence that Musk understood the SEC disclosure and had testified about it under oath. The case, titled Oklahoma Firefighters Pension and Retirement System v Musk et al, is being heard in the US District Court for the Southern District of New York.
Musk argued that “all indications” point to his delay being an unintentional mistake rather than an attempt to defraud shareholders.
The proposed class action lawsuit claims that Musk and his wealth manager, Jared Birchall, were aware of the US Securities and Exchange Commission (SEC) rule requiring Musk to disclose his 5% stake in Twitter by March 24, 2022. However, they waited an additional 11 days to do so.
The investors argued that this delay allowed Musk to purchase more shares at lower prices, resulting in savings of over $200 million. Following Musk’s disclosure of his 9.2% stake on April 4, 2022, Twitter’s stock price surged by 27%.
In his defense, Musk said that he had planned to disclose his Twitter stake at the end of 2022 but promptly revealed it upon realizing he had misinterpreted the SEC disclosure rule.
“This is not a scheme to defraud,” Musk said. “All indications–including those in the pleadings–point to mistake.”
Musk also refuted the investors’ claim that an unnamed Morgan Stanley banker assisted in developing a trading strategy to accumulate Twitter shares without alerting the broader market.
Last September, US District Judge Andrew Carter declined to dismiss an earlier version of the lawsuit, citing evidence that Musk understood the SEC disclosure and had testified about it under oath. The case, titled Oklahoma Firefighters Pension and Retirement System v Musk et al, is being heard in the US District Court for the Southern District of New York.