An American judge on Friday rejected the application of billionaire Elon Musk of dismissing a lawsuit that accuses him of having defrauded Twitter exactists when waiting too much to reveal his initial investment in the social media company, now known as X.
The federal district judge Andrew Carter in Manhattan said that the shareholders adequately claimed that Musk, now an important advisor to President Donald Trump, intended to commit fraud through an improper regulatory presentation, deceptive tweets on the future of Twitter and a strategy to build “silently” his participation on Twitter.
Carter dismissed other allegations in the proposed collective claim. He did not pronounce on the bottom of the case. The United States Stock Exchange and Securities Commission (SEC) is also demanding from Musk for late dissemination.
Musk’s lawyers did not immediately respond to comments requests.
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The plaintiffs, headed by the Oklahoma Firefighters pension system, said Musk ignored the deadline of the SEC of March 24, 2022 to reveal that he had bought 5% of Twitter’s shares and waited 11 more days before revealing his 9.2% participation in a presentation before the SEC.
The plaintiffs said that this saved Musk more than 200 million dollars and harmed them because they sold Twitter shares at artificially low prices. Musk bought the entire Twitter for 44,000 million dollars in October 2022.
In a 43 -page decision, Carter said that the dissemination of 9.2% participation by Musk could be considered misleading because he suggested that he made a “passive” investment and that he did not plan to buy the company.
Carter said that shareholders could also sue for two tweets of March 26, 2022, in which Musk said he was “seriously considering” building a rival for Twitter, and responded to a suggestion that Twitter bought and changed his bird logo for a doge saying “Ja, that would be (would be) sick.”
Musk’s lawyers said the tweets undermined any fraudulent suggestion of intention because they could attract unwanted attention towards him with respect to Twitter, but Carter found the argument of the plaintiffs “at least just as convincing.”
Twitter shares rose 27% on April 4, 2022 after Musk revealed their 9.2% participation.
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The case is Oklahoma Firefighters Pension and Retirement System v. Musk et al, the US District Court, South District of New York, No. 22-03026.
With Reuters information
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