Former Twitter investors will file a class action lawsuit against Musk over suspected fraud
Former investors in Twitter, now called X, intend to file a class action lawsuit against the platform’s owner Elon Musk over his late disclosure of his initial investment in the company. Reuters reports this, citing a ruling by federal judge Andrew Carter in Manhattan, New York.
The investors claim that Musk failed to comply with a requirement by the US Securities and Exchange Commission to disclose his 5% stake in Twitter by March 24, 2022. Instead, the businessman did so only 11 days later and then reported a 9.2% stake.
Shareholders believe that Musk misled them and saved them over $200 million, as during these 11 days investors sold Twitter shares at undervalued prices.
They also noted that they were guided by two posts by Musk from March 26, 2022, in which he wrote that he was “seriously considering” creating a Twitter competitor. He also replied “haha, that would be cool” to a user’s suggestion to buy the social network.
In response, Musk says there is no evidence that investors actually relied on his alleged fraudulent actions. However, the judge noted that Musk did not refute the assumption that his allegedly false statements could have affected the value of Twitter shares, and investors relied on his silence.
The final amount of losses that investors may have suffered has not yet been established. At the same time, Judge Carter stated that even without an accurate assessment of these damages, the class action lawsuit could be accepted.
