Elon Musk is once again making headlines. This time, it’s regarding a lawsuit filed by former Twitter shareholders. 

Elon Musk's Bid to Dismiss Twitter Disclosure Lawsuit ExplainedElon Musk Seeks Dismissal of Twitter Disclosure Lawsuit: A Breakdown of the Controversy

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• Elon Musk seeks dismissal of lawsuit over delayed disclosure of his 9.2% Twitter stake.

• Shareholders claim Musk’s delay saved him $200 million; Musk argues it was an unintentional mistake.

• The case highlights tensions between major stock acquisitions, SEC regulations, and shareholder rights.

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The Lawsuit: Late Disclosure of Twitter Stake

In early 2022, Musk acquired a significant 9.2% stake in Twitter (now known as X). 

However, former shareholders claim he waited too long to disclose this information, violating SEC rules. 

According to these investors, Musk should have revealed his 5% ownership by March 24, 2022, but waited an additional 11 days.

The Shareholders’ Argument

The delay, as the shareholders alleged, allowed Musk to purchase more Twitter shares at lower prices. 

They estimate this saved him over $200 million. When Musk finally disclosed his 9.2% stake on April 4, 2022, Twitter’s stock price surged by 27%.

Musk’s Defense

In a recent court filing, Musk argues that the late disclosure was a mistake, not a deliberate attempt to defraud shareholders. 

He claims he intended to reveal his Twitter stake at the end of 2022 but disclosed it promptly upon realizing he had misunderstood the SEC disclosure rule.

Musk also denied the investors’ claim that an unnamed Morgan Stanley banker helped devise a trading strategy to amass Twitter shares without alerting the broader market.

The Legal Battle Continues

U.S. District Judge Andrew Carter previously refused to dismiss an earlier version of the lawsuit. 

He found evidence suggesting Musk understood the SEC disclosure rules and had testified about them under oath.

The SEC’s Involvement

It’s worth noting that the Securities and Exchange Commission (SEC) has also been investigating Musk’s Twitter stock purchases.

What’s Next?

This legal battle raises important questions about stock ownership transparency and high-profile investors’ responsibilities. 

The outcome of this case could have significant implications for future interpretations of SEC disclosure rules.

The Oklahoma Firefighters Pension and Retirement System v Musk et al. case is being heard in the U.S. District Court, Southern District of New York.

As developments continue, it will be interesting to see how this case impacts Musk’s reputation and the broader landscape of corporate disclosures.

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