Elon Musk is attempting to dismiss a lawsuit filed by former Twitter shareholders who allege he violated SEC rules by delaying the disclosure of his substantial stake in the company. The lawsuit, filed in Manhattan federal court, claims Musk knowingly waited to disclose his 9.2% stake in Twitter, a move that allowed him to buy shares at cheaper prices and benefit from the subsequent rise in the stock price.
In a late-night filing, Musk argues that the delay was a mistake resulting from a misunderstanding of SEC disclosure regulations. He insists he intended to disclose his stake by the end of 2022 and only disclosed it promptly after realizing his error. Musk firmly denies any intent to defraud shareholders and further denies the involvement of Morgan Stanley in a strategy to amass Twitter shares without market awareness.
The shareholders’ claim hinges on the argument that Musk knew he was required to disclose his stake by March 24, 2022, but deliberately waited until April 4th. They believe this delay saved Musk over $200 million. The lawsuit states that Musk’s disclosure of his stake caused a 27% rise in Twitter’s stock price.
In September 2022, a U.S. District Judge refused to dismiss a similar lawsuit, citing evidence suggesting Musk’s understanding of the SEC disclosure requirement. Musk’s latest filing seeks to overturn this ruling.
The lawsuit, led by the Oklahoma Firefighters Pension and Retirement System, alleges that Musk and his wealth manager Jared Birchall violated SEC rules by failing to disclose Musk’s ownership stake within the required timeframe.
The case, “Oklahoma Firefighters Pension and Retirement System v Musk et al,” is ongoing in the U.S. District Court for the Southern District of New York. The outcome of this legal battle could have significant implications for shareholder rights and SEC regulations.