Elon Musk faces legal battle over Twitter stake disclosure

Elon Musk, the renowned entrepreneur and CEO of companies like Tesla, is currently embroiled in a legal battle with former Twitter shareholders. The shareholders allege that Musk intentionally delayed disclosing his significant ownership stake in Twitter, leading to accusations of defrauding investors.

The lawsuit claims that Musk and his wealth manager were aware of an SEC rule mandating the disclosure of a 5% ownership in Twitter by March 24, 2022. However, Musk revealed his 9.2% stake 11 days later, sparking controversy. The delay allegedly allowed Musk to purchase more shares at lower prices, resulting in substantial savings of over $200 million.

In response, Musk has defended his actions, stating that the delay was a mistake rather than a deliberate attempt to deceive shareholders. He explained that he had initially planned to disclose his Twitter stake by the end of 2022 but misunderstood the SEC rule, prompting him to disclose it promptly upon realizing the error.

Moreover, Musk refuted claims that a Morgan Stanley banker assisted him in devising a trading strategy to accumulate Twitter shares discreetly. The investors, led by an Oklahoma public pension fund, have yet to respond to Musk's defense.

In a significant development, Musk eventually acquired Twitter for $44 billion in October 2022. The SEC has also launched an investigation into Musk's Twitter stock purchases. U.S. District Judge Andrew Carter previously declined to dismiss an earlier version of the lawsuit, citing evidence that Musk was aware of the SEC disclosure requirements.

The legal dispute surrounding Elon Musk's delayed disclosure of his Twitter stake underscores the importance of transparency and compliance with regulatory obligations in the financial markets. While Musk maintains that the delay was an inadvertent error, the ongoing scrutiny highlights the need for accountability and adherence to disclosure rules to protect investor interests.