Elon Musk was sued by a Twitter Inc. shareholder who claims the Tesla Inc. CEO’s delay in disclosing his ownership of more than 5% of the social media company artificially kept its share price down.
Marc Bain Rasella sued Musk for securities fraud in Manhattan federal court Tuesday, claiming Musk was required to disclose his holdings to the SEC by March 24. Musk’s delay in filing the disclosure allowed him to buy more shares at a lower price and cheated the sellers of Twitter sales of increased profits, Rasella claims.
Musk didn’t immediately respond to a request for comment. Twitter declined to comment on the suit.
The investor said that, when Musk filed the form revealing his Twitter stake, company shares rose 27%, from $39.31 on April 1 to $49.97 on April 4.
Rasella is seeking to represent a class of investors who sold Twitter shares from March 24 to April 1.
The case is Rasella v. Musk, 22-cv-03026, U.S. District Court, Southern District of New York (Manhattan).