NEW YORK: Elon Musk asked a US judge to throw out a lawsuit claiming that his delayed disclosure of a large stake in Twitter defrauded shareholders who sold Twitter stock at artificially low prices because they were kept in the dark.
In the federal court case in Manhattan, investors accused Musk, who bought Twitter for US$44 billion in October, of waiting 11 days past a US Securities and Exchange Commission deadline the previous March to disclose he had bought 5 per cent of its stock.
The shareholders said Musk saved more than US$200 million by adding to his holdings – while quietly meeting with Twitter executives about his plans for the social media company – before finally revealing a 9.2 per cent stake, cheating stock sellers and options traders out of the “true value” of their securities.
But in a Monday (Jan 30) night filing, Musk said investors in the proposed class action had no independent right to obtain damages under the SEC disclosure rule, and could not show that all class members actually relied on his silence before trading.
Musk also noted, as had the shareholders, that he had properly disclosed his stakes in electric car maker Tesla and the former SolarCity Corp at least 20 times, and even mentioned the SEC rule to Saudi Arabia’s sovereign wealth fund in 2018 when negotiating a possible investment in Tesla.
