As the drama around Twitter and Elon Musk continues, investors in the social media platform have decided to sue Musk.
Blaming him for stock “manipulation” during the acquisition bid, investors have been unhappy with how Twitter’s stock has taken a downward plunge, Reuters reported.
Filed as a class action suit, investors have claimed that Musk has illegally driven down the stock price and also saved himself $156 million by failing to disclose that he had already purchased more than 5 percent of Twitter by March 14.
The amount of punitive and compensatory damages asked for in this class action suit has not been specified.
Overall, investors are very unhappy with how quickly things moved and how Musk did not disclose all of his moves. Now they are arguing that his process drove down the overall value of Twitter.
“The fair market value of Twitter securities has been adversely affected by Musk’s false statements and wrongful conduct,” the complaint reads,
Some of the allegations in the suit include that Musk worked out the buyout deal “without carrying out any due diligence” and that he then acted unlawfully to drive down the price of Twitter’s stock after Tesla’s stock (which is tied up in the financing for the deal) fell.
“Because Tesla’s stock is worth much less now than when Musk agreed to buy Twitter, Musk is at risk of a margin call or a requirement to put up more cash. Musk quickly acted to attempt to mitigate these personal risks to himself by engaging in unlawful conduct that moved the price of Twitter’s stock down,” the lawsuit reads.
On top of that, the suit also claims that Musk did not file his purchase of his original stake in the company, which tampered with the whole price of the deal.
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price, in violation of the California Corporations Code,” the lawsuit reads.
The lawsuit sums up that in general, Musk and the actions he took regarding Twitter did not take into account the law or the Americans invested with Twitter.
“Musk’s disregard for securities laws demonstrates how one can flaunt the law and the tax code to build their wealth at the expense of the other Americans,” the complaint reads.
There was already trouble brewing for the deal when reports about the number of bots on the platform came out and Musk announced that the deal was temporarily on hold.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
On top of that, the share hold value of Twitter has fluctuated and fallen drastically in the midst of the drama.
Twitter’s stock is now trading at $39.52, CNBC News reported. This is a nearly 23 percent decrease from what it was trading at in April, prior to Musk’s announcement that he would be buying the platform.
Musk and his lawyers have not yet made any comment on the lawsuit filed by investors.
But he has previously stated that he is committed to going through with the deal for Twitter, CNBC News reported.
On Wednesday, a new filing announced that he was fronting another $33.5 billion in his bid, as financing for the deal is still being sorted.
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