The complaint, filed on behalf of investor Marc Bain Rasella, accuses Musk of violating a regulatory deadline to disclose his stake in Twitter when it was at least 5%. Instead, Musk allegedly announced details of his Twitter shares only after they almost doubled.
Under US Securities law, investors are required to disclose their shares within 10 days of acquiring a 5% stake in a company. In Musk’s case, the deadline for making the disclosure would have been 24 March, but he did not disclose his 9.2% stake — which makes him Twitter’s largest shareholder — until 4 April when Twitter’s stock rose to approximately 27% compared to its 1 April close.
The lawsuit claims the disclosure delay reduced the chance for several investors to achieve significant gains. The lawsuit also claims the delay caused harm to less wealthy investors who sold their shares in the company two weeks prior to Musk announcing his major stake.
The lawsuit is seeking unspecified compensatory and punitive damages.
