Written by Jonathan Stempel
Overview of the Lawsuit
Why is Elon Musk requesting the dismissal of the lawsuit?
Elon Musk is requesting the dismissal of a lawsuit brought by former Twitter shareholders who claim he should have disclosed his significant ownership position in the social media business earlier in 2022. Musk claims that “all indications” point to a mistake in his timing.
Claims and Allegations
What are the main claims made by the shareholders?
Shareholders allege that Musk and his wealth manager Jared Birchall were aware of the SEC regulation requiring Musk to declare his acquisition of 5% of Twitter by March 24, 2022, but they chose to wait an additional 11 days. This delay allegedly allowed Musk to save over $200 million by purchasing more shares at discounted rates.
Musk’s Defense
What is Musk’s defense against these claims?
Musk stated in a late-night petition in Manhattan federal court that it is ludicrous to think he intended to deceive investors who sold their shares and lost out on significant profits. He argued that he planned to divulge his Twitter ownership around the end of 2022 but did so earlier after realizing he had misinterpreted the SEC disclosure regulation. Musk emphasized, “This is not a fraud scheme. All indications–including those in the pleadings–point to mistake.”
SEC and Other Investigations
What other investigations are related to this case?
The SEC has also looked into the stocks Musk bought on Twitter. The U.S. District Judge Andrew Carter rejected the original version of the complaint last September, citing evidence that Musk was aware of the SEC disclosure and had spoken about it under oath.
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FAQs
What is the main reason Musk is seeking to dismiss the lawsuit?
Musk argues that his delayed disclosure of his Twitter ownership was a mistake, not a deliberate attempt to deceive investors.
What do the shareholders allege regarding Musk’s disclosure timing?
Shareholders allege that Musk delayed his disclosure to save over $200 million by buying shares at discounted rates.
How has the SEC been involved in this case?
The SEC has investigated the stocks Musk bought on Twitter, and the U.S. District Judge cited evidence that Musk was aware of the SEC disclosure regulation.
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