Elon Musk finds himself at the throes of scandal once again as a Twitter shareholder alleges that the billionaire didn’t disclose details regarding his stake in Twitter. According to the shareholder, the assumed reason for Elon’s secrecy was so that he could buy more shares of the company at much lower prices.
The suit, filed in Manhattan federal court on Tuesday, accused Musk of violating securities law by not revealing by March 24 that he had accumulated a stake of at least 5% in Twitter (ticker: TWTR). According to the lawsuit, Musk’s stake in Twitter had reached 5%, which would have required him to disclose his stake 10 days later by March 24 publicly. Musk neglected to file the required disclosure with the Securities and Exchange Commission until April 4, after he had already boosted his position to over 9%.
Marc Bain Rasella, a Twitter shareholder, filed the lawsuit against Musk. He is apparently seeking to have the lawsuit certified as a class action for shareholders who sold Twitter stock between March 21 and April 1.
According to Rasella, when Musk filed the form disclosing his Twitter position, the stock climbed 27% from its April 1 closing position to $49.97 on April 4, and as a result, investors “missed the resulting share price increase as the market reacted to Musk’s purchase,” alleged the lawsuit.
“By failing to timely disclose his ownership stake, Musk was able to acquire cheaper shares of Twitter during the Class period,” said the lawsuit.
Musk is yet to comment on the lawsuit and has not released any statement on his Twitter regarding the issue as he is known to do. Twitter shares were rising 1% to $44.92 in premarket trading Wednesday. The shares then dropped 5.4% on Tuesday and have generally declined more than 36% over the past year.