Elon Musk to face fraud lawsuit over delayed Twitter stake disclosure 

In a significant legal development, a U.S. judge has ruled that Elon Musk must confront a lawsuit alleging he deceived former Twitter shareholders by failing to promptly disclose his investment in the social media platform.

The lawsuit, which accuses Musk of intentionally waiting 11 days past a U.S. Securities and Exchange Commission (SEC) deadline to reveal his purchase of 5 per cent of Twitter's shares, could have far-reaching implications for the tech billionaire. U.S. District Judge Andrew Carter's decision has cleared the way for shareholders in the proposed class action to pursue their claims.

Judge Carter's ruling also addressed an insider trading allegation against Musk, the world's wealthiest individual, and dismissed it. Lawyers representing Musk have yet to respond to this latest development.

Add WION as a Preferred Source

The plaintiffs, led by an Oklahoma firefighters pension fund, contend that Musk benefited substantially by increasing his Twitter stake and quietly discussing his plans with company executives, all before ultimately disclosing his 9.2 per cent stake in April 2022. They argue that Musk's delay in disclosure resulted in them selling Twitter shares at artificially deflated prices.

Musk's legal team has argued that their client's failure to disclose in a timely manner was unintentional, attributing it to his hectic schedule as "one of the busiest people on the planet."

However, Judge Carter expressedscepticismabout Musk's claim of being too busy, pointing out that Musk had found time to acquire Twitter shares, meet with company executives, and engage in online discussions about Twitter. The judge also noted that Musk had demonstrated an understanding of the 5 per cent disclosure rule, having testified about it under oath and properly disclosed stakes in his electric car company, Tesla, as well as the former SolarCity, on multiple occasions.

Elon Musk's acquisition of Twitter, which amounted to $44 billion in October 2022, marked a significant move in the tech world. Under SEC regulations, investors are required to disclose the acquisition of 5 per cent or more of a company's shares within 10 days.

When Musk eventually revealed his 9.2 per cent stake in Twitter on April 4, 2022, the social media company's shares experienced a notable surge, rising by 27 per cent from $39.31 to $49.97. This event ultimately valued Twitter at $54.20 per share.

The legal case, titled Oklahoma Firefighters Pension and Retirement System v. Musk et al, is now set to proceed in the U.S. District Court for the Southern District of New York.

(With inputs from Reuters)

WATCH WION LIVE HERE