Elon Musk’s unusual problem with Twitter – he Want to buy now – Silicon Valley and caught the attention of the social media world, but even some defense lawyers.
Thursday morning Mr. Even before Musk announced his acquisition of Twitter for about $ 43 billion, his accumulation of a large stake in the social media company last month caught the eye of a law firm that has sued the millionaire.
On Tuesday, law firm Block & Leviton filed a lawsuit Mr. Federal case against Musk On behalf of several Twitter shareholders, they said the loss may have occurred when the Tesla CEO was creating more than 9 percent of the shares on Twitter. The lawsuit seeks to establish a class action and argue that investors may have lost potential gains on Twitter, which sold shares at the end of last month.
Mr. has accumulated a 9 percent stake in Twitter. The civil complaint alleges that Musk – who turned him into the company’s largest shareholder – began building his shares much earlier on April 4th. Mr. Musk’s share price rose from $ 39.31 to $ 49.97 when Musk finally announced its stake on Twitter. Mr. The lawsuit alleges that Musk must have filed a lawsuit by March 24 alleging that he bought a 5 percent equity stake in Twitter.
The Securities and Exchange Commission (SEC) requires investors to disclose their holdings of 5% or more in a company within 10 days of purchase of shares – a rule that compels investment managers such as hedge funds to disclose their activities. Market.
Due to non-filing of required within that time limit, Mr. The lawsuit alleges that Musk saved money by buying Twitter shares at a cheaper price. And he lost even before he revealed the opportunity for investors who sold the shares to benefit from the price gain.
On Twitter, Mr. Since Musk took over his large financial position, Wall Street and security lawyers have speculated that the SEC may investigate whether the billionaire violated any securities laws by not immediately releasing his shares.
If the SEC is to inquire into the late disclosure, Mr. Musk should consider whether he intended to violate the 5 percent filing rule or whether it was a negligent mistake or oversight.
The SEC declined to comment. Mr. Musk’s lawyer was not immediately available for comment.
Dennis Kelleher of Better Markets, Corporate and Regulatory Transparency Monitor, said regulators have a duty to look into the disclosure issue to send the message that all investors are treated equally.
“The rule of law will be broken if millionaires play by different rules,” he said.
In February, the SEC proposed Halves the duration Investors are required to publicly disclose 5 percent of their holdings in a company from the current 10 days.
Robert Jackson Jr., a former SEC commissioner and now a professor at New York University School of Law, Mr. The apparent delay in Musk’s revelation may be related to Williams’ law – which is five decades old. Basic rules for unsolicited or hostile acquisition attempts.
“Williams’ law is precisely designed to protect investors in this situation – an acquirer secretly buys shares and then uses them as a tollhold to launch an auction for the entire company,” said NYU’s Associate Director of Corporate Governance. Jackson said. And finance. “If it’s not a case of raising Williams law concerns, it’s hard to know what would happen.”
Mr. Twitter. The attempt to acquire Musk comes a few weeks after he did Initiated an effort to bring it to an end The four-year-old settlement with the SEC is that his posts on Twitter should be reviewed for information on market moves by officials at Tesla, the electric car company he runs. The solution with SEC, as a result of a post on Twitter, Mr. He had made it clear that Musk was financing the takeover of Tesla personally.
Mr. Musk has been frustrated ever since with the solution and the need for his posts to be reviewed on Twitter. In one of the court cases, Mr. Muskin’s lawyer said the current terms of the compromise were “unconstitutional restraint on Mr. Muskin’s speech.”
Ephrat Livni Contributed report.