Billionaire Elon Musk is being sued by Twitter Inc (TWTR.N) investors who claim he manipulated the company’s stock price downward, as the CEO prepares a $44 billion takeover bid for the social media platform.
According to the investors, Musk saved $156 million by failing to disclose that he had purchased more than 5% of Twitter by March 14.
They requested class certification and an unspecified amount of punitive and compensatory damages.
They also named Twitter as a defendant, claiming the company should have investigated Musk’s actions.
According to the lawsuit, which was filed on Wednesday in San Francisco, the investors claimed Musk continued to buy stock after that and eventually disclosed in early April that he owned 9.2% of the company.
“By delaying his disclosure of his Twitter stake, Musk engaged in market manipulation and purchased Twitter stock at an artificially low price,” the investors, led by Virginia resident William Heresniak, claimed.
The recent drop in Tesla’s stock has put Musk’s ability to finance his acquisition of Twitter in “major jeopardy,” according to the investors, because he has pledged his shares as collateral to secure the loans, he needs to buy the company.
Tesla’s stock was trading around $713 per share on Thursday afternoon, down from over $1,000 in early April.
Writing by Saadatu Albashir