Late Twitter Disclosure Mistake, Musk Wants Lawsuit Dropped

Musk says “all indications” imply he delayed too long in early 2022 to report his big ownership stake in Twitter, and he wants to dismiss a lawsuit by former shareholders

Musk claimed in a late Wednesday night filing in Manhattan federal court that it was implausible to believe that he intended to defraud shareholders unaware of his 9.2% Twitter stake and missed out on significant gains due to the sale of their stock.

According to investors in the proposed class action, Musk and his wealth manager, Jared Birchall, were aware of a U.S. Securities and Exchange Commission rule that mandated Musk to disclose his ownership of 5% of Twitter by March 24, 2022. However, they delayed the disclosure by 11 days.

According to the investors, this enabled Musk to acquire additional shares at a reduced cost, resulting in over $200 million in savings. On April 4, 2022, Twitter, now known as X, experienced a 27% increase in value following Musk’s disclosure of his 9.2% stake.

According to Forbes magazine, Musk is the world’s wealthiest individual and the CEO of Tesla, an electric vehicle manufacturer.

Musk stated in his filing that he had intended to disclose his Twitter stake at the end of 2022. However, he promptly disclosed it after it became apparent that he had misconstrued the SEC disclosure rule.

Musk declared, “This is not a fraudulent scheme.” “All indications–including those in the pleadings–point to mistake.”

Musk also refuted the investors’ assertion that an unidentified Morgan Stanley MS.N banker assisted in the development of a trading strategy to accumulate Twitter shares without informing the broader market.

On Friday, the investors’ attorneys, representing an Oklahoma public pension fund, have yet to respond to inquiries for comment promptly.

In October 2022, Musk acquired Twitter, headquartered in San Francisco, for $44 billion. Additionally, the Securities and Exchange Commission (SEC) has investigated his acquisitions of Twitter stock.

In September of last year, U.S. District Judge Andrew Carter declined to dismiss an earlier version of the lawsuit, citing evidence that Musk comprehended the SEC disclosure and provided testimony under oath.

The case is Oklahoma Firefighters Pension and Retirement System v Musk et al., U.S. District Court, Southern District of New York, No. 22-03026.