Musk calls late Twitter disclosure a mistake, seeks to end lawsui
Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X looks on during the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, US, May 6, 2024. PHOTO: Reuters
Elon Musk wants to dismiss a lawsuit by former Twitter shareholders who said he waited too long in early 2022 to reveal his large ownership stake in the social media company, saying "all indications" show his delay was a mistake.
In a late Wednesday night (July 3) filing in Manhattan federal court, Musk called it implausible to believe he wanted to defraud shareholders who didn't know he had taken a 9.2 per cent Twitter stake, and missed out on big gains because they sold their own stock.
Investors in the proposed class action said Musk and his wealth manager Jared Birchall knew a US Securities and Exchange Commission rule required Musk to disclose by March 24, 2022 he had bought five per cent of Twitter, yet waited another 11 days.
The investors said this let Musk buy more shares at cheap prices, saving more than US$200 million (S$270 million). Twitter, now known as X, rose 27 per cent on April 4, 2022 after Musk revealed his 9.2 per cent stake.
Musk is the world's richest person according to Forbes magazine, and runs other companies including electric car maker Tesla.
In his filing, Musk said he had intended to reveal his Twitter stake at the end of 2022, but disclosed it promptly after realizing he misunderstood the SEC disclosure rule.
"This is not a scheme to defraud," Musk said. "All indications — including those in the pleadings — point to mistake."
Musk also denied the investors' claim that an unnamed Morgan Stanley MS.N banker helped devise a trading strategy to amass Twitter shares without alerting the broader market.
Lawyers for the investors, who are led by an Oklahoma public pension fund, did not immediately respond to requests for comment on Friday.
Musk eventually bought San Francisco-based Twitter for US$44 billion in October 2022. The SEC has also probed his Twitter stock purchases.
Last September, US District Judge Andrew Carter refused to dismiss an earlier version of the lawsuit, finding evidence that Musk understood the SEC disclosure and testified about it under oath.