Elon Musk Faces Ongoing Lawsuit by Former Twitter Shareholders, as Decided by a Federal Judge
In a shocking turn of events, legal eagles are ready to take billionaire Elon Musk to task! The claims allege that the tech titan intentionally concealed his Twitter stock acquisitions, pocketing a whopping $150 million while putting other investors at risk.
A federal judge has given a green light to former Twitter shareholders to push ahead with their class-action lawsuit against the controversial mogul. The case, named Rasella v. Musk, is being heard in the U.S. District Court for the Southern District of New York. Investors, including retirement pension funds, believe Musk's failure to disclose his Twitter stock ownership within the stipulated timeline was unlawful, flouting federal securities statutes.
One of the plaintiffs, Oklahoma Firefighters Pension and Retirement System, contends they shed their Twitter shares at artificially deflated prices. This, they claim, happened while Musk was surreptitiously buying up more stock.
Musk's legal team argues that their client may have made a late disclosure, but it was a slip-up, absolutely unintentional, and no evidence suggests Musk committed or intended securities fraud.
However, U.S. District Judge Andrew L. Carter held that Musk's non-disclosure sent a false pricing signal to the market. He also observed that in March 2022, Musk shared a tweet hinting at his interest in purchasing another social media network. By that time, Musk had already purchased millions of Twitter shares.
Judge Carter reasoned that Musk's tweet could reasonably be interpreted as a ploy to divert public attention away from his actual Twitter stock purchases. He went further to suggest that it's more likely than not that Musk issued a material misleading representation.
After acquiring stock, Musk bid about $44 million for a buyout. He later attempted to back out, but Twitter sued him for failing to honor his contractual commitment to buy the company.
The Securities and Exchange Commission (SEC) has also launched legal action against Musk, filing a lawsuit against him in January 2025, five days before President Trump's inauguration. The SEC alleges that Musk hoarded around $500 million worth of Twitter shares, evading disclosure and underpaying by an estimated $150 million.
"Because Musk failed to timely disclose his beneficial ownership, he was able to make these purchases from the unsuspecting public at artificially low prices, which did not yet reflect the undisclosed material information of Musk's beneficial ownership of more than five percent of Twitter common stock and investment purpose," the lawsuit stated, accusing Musk of waiting 11 days before disclosing his stake. Despite his privileged position within the Trump administration, the SEC has yet to drop or seek a dismissal of its lawsuit.
[Sources]: Elon Musk must face fraud lawsuit over disclosure of Twitter stake, Elon Musk must face Twitter shareholders' lawsuit over alleged securities fraud, Elon Musk underpaid Twitter acquisition by $150M by not disclosing stake, SEC alleges.
- Investors, including retirement pension funds, are involved in the class-action lawsuit against Elon Musk, accused of unlawful withholding of Twitter stock disclosure, which is a violation of federal securities statutes in the business world.
- The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk in January 2025, alleging that he hoarded around $500 million worth of Twitter shares, avoided disclosure, and underpaid by an estimated $150 million, a breach of finance regulations.
