Elon Musk seeks to dismiss a lawsuit filed by former Twitter shareholders who allege he delayed revealing his significant ownership stake in the social media company in early 2022. Musk claims that “all indications” suggest his delay was a mistake.
In a Wednesday night filing in Manhattan federal court, Musk argued that it is implausible to believe he intended to defraud shareholders who were unaware of his 9.2% stake in Twitter and subsequently missed out on substantial gains after selling their own stock.
The proposed class action investors allege that Musk and his wealth manager, Jared Birchall, were aware of a U.S. Securities and Exchange Commission (SEC) rule requiring Musk to disclose his 5% ownership of Twitter by March 24, 2022, but waited an additional 11 days. The investors claim this allowed Musk to buy more shares at lower prices, saving over $200 million. Twitter, now rebranded as X, saw its stock rise by 27% on April 4, 2022, after Musk revealed his 9.2% stake.
Musk, the world’s richest person according to Forbes, also runs other companies, including electric car manufacturer Tesla. In his filing, Musk stated that he intended to disclose his Twitter stake by the end of 2022 but did so earlier after realizing he had misunderstood the SEC disclosure rule.
“This is not a scheme to defraud,” Musk asserted. “All indications, including those in the pleadings, point to a mistake.”
Musk also refuted the investors’ claim that an unnamed Morgan Stanley banker helped devise a strategy to accumulate Twitter shares without alerting the broader market.
Lawyers for the investors, led by an Oklahoma public pension fund, did not immediately respond to requests for comment on Friday.
Musk eventually acquired San Francisco-based Twitter for $44 billion in October 2022. The SEC has also investigated his Twitter stock purchases.
Last September, U.S. District Judge Andrew Carter declined to dismiss an earlier version of the lawsuit, citing evidence that Musk understood the SEC disclosure rule and had testified about it under oath.
The case is Oklahoma Firefighters Pension and Retirement System v. Musk et al, U.S. District Court, Southern District of New York, No. 22-03026.
