Chairman of X, Elon Musk, has requested the dismissal of a lawsuit filed by former Twitter shareholders in a recent Manhattan federal court filing who claim that he concealed his significant ownership interest in the social media company until early 2022.
Elon Musk argued that there were “all sorts of signs” which revealed his deliberate delay was not an attempt to defraud shareholders.
According to the proposed class action suit, Musk and his wealth adviser, Jared Birchall, knew about an SEC rule requiring him to disclose his 5% stake in Twitter by March 24th. However, they waited for another eleven days before doing so.
Having bought more shares at lower prices due to this procrastination, investors claimed savings worth upwards of $200m. Twitter’s stock price also shot up by 27% after the disclosure on April 4th when Musk stated he held a stake of 9.2%.
In defense, Musk explained that he had intended declaring his position in relation to Twitter at the end of December but promptly announced it when he discovered he had misunderstood the SEC disclosure rule.
“This is not a scheme designed to cheat,” said Musk. “All indications – including those contained within these pleadings – point towards mistake.”
Musk also denied investor’s accusation that some Morgan Stanley banker whose identity is withheld helped them come up with a trading plan for buying Twitter shares without alerting others.
US District Judge Andrew Carter didn’t dismiss an earlier version of the case last September based on evidence showing that Musk was aware of SEC disclosure requirements and testified about them under oath. The case is Oklahoma Firefighters Pension and Retirement System v Musk et al being heard in US District Court for the Southern District NY.
