Twitter shareholders sue Elon Musk for manipulating stock price

LAGOS (CoinChapter.com) — Shareholders of popular social blogging network, Twitter have sued Tesla and SpaceX CEO Elon Musk for manipulating the price of the company’s shares through his comments after the $44 billion deal agreement.

In detail, Twitter’s shareholders in the lawsuit alleged that Musk intentionally manipulated the company’s stock price downward to benefit himself. They also claimed that the Tesla CEO through his actions violated California corporate laws on several fronts.

The shareholders in the lawsuit explained that Musk through his negative comments gradually drove Twitter’s stock market price down. Consequently, as a result of the decline, Musk would be able to negotiate a better deal whilst acquiring the social media platform.

Twitter shareholders pointed out that Musk’s conduct since signing the purchase agreement on April 25th has been unpleasant. Particularly his recent statement that the deal cannot move forward without more information about automated accounts on the platform.

Additionally, they are accusing him of not playing fair by not disclosing his stake in Twitter before the acquisition. They asked to be certified as a class and to be awarded an unspecified amount of punitive and compensatory damages.

Furthermore, the aggrieved named Twitter as a defendant in the lawsuit. They are arguing that the company did not properly fulfill its obligation of investigating Musk’s conduct.

William Heresniak filed the lawsuit on behalf of Twitter’s stakeholders. Although, they are not seeking damages from Twitter, despite adding it to the lawsuit. It is also worth noting that Heresniak’s lawsuit does not seek to stop the takeover.

Twitter Shares Has Plummeted Since Elon Musk Acquisition

Meanwhile, shares of the leading social media network have dropped significantly since Elon Musk signed the takeover agreement.

Twitter has reportedly lost about $8 billion in valuation since Elon Musk’s buyout was announced. Data from Google finance indicated that TWTR has slid more than 10% since reaching its high for the year in late April.

As of press time, Twitter shares were trading below $40, well below $54.20 when Musk agreed to buy the social media platform.

In a related development, Tesla’s shares have also been immensely affected by the ongoing fiasco. The electric car company stocks is down by 33% to trade around $750 on Friday afternoon, down from above $1,000 in April.

SEC Questions Tesla CEO Over Twitter Stake Disclosure

Meanwhile, the United States Securities and Exchange Commission (SEC) has questioned Elon Musk over the late disclosure of his stake in Twitter.

Notably, the SEC requires an investor who buys a stake exceeding 5% in a company to disclose their holdings. Any individual with a stake above the specified limit must inform the SEC within 10 days of crossing the threshold.

The SEC also queried Elon Musk why he initially filed a disclosure meant for passive investors that do not plan to exercise their influence to make any change at a company.