Twitter sues Elon Musk for stock manipulation

The Twitter Inc. x Elon Musk saga continues.

This time around the billionaire was sued by the social network company’s investors over “market manipulation.”

The lawsuit, which was filed by investor William Heresniak, is accusing the billionaire of “wrongful conduct” led by his “false statements and market manipulation [which] have created ‘chaos’ at Twitter’s headquarters in San Francisco.”

Heresniak claimed in the lawsuit that Musk benefitted financially by delaying the disclosure of his significant stake in Twitter and his plan to become the company’s board member. Allegedly, Musk saved himself $156 million by not disclosing that he had purchased over 5% of Twitter by 14 March.

“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the investors added.

Musk continued to purchase the company’s stocks after 14 March as the Tesla Chief Executive Officer (CEO) said in early April that he owned 9.2% of Twitter.

Twitter stocks have been drastically falling since the beginning of April losing over 20% of their value.

What happened since Musk’s bid to buy the company? Let’s have a closer look.

14 April 2022 – Musk offers to purchase Twitter

Musk offered to purchase Twitter for $43 billion after acquiring 9.2% of the company’s stock for $2.64 billion and becoming its largest shareholder.

25 April 2022 – Musk and Twitter reach an agreement for sale

On 25 April, Musk and Twitter reached an agreement that the company would be taken over at $54.20 a share, roughly amounting to a total of $44 billion.

11 May 2022 – the SEC and FTC open investigations into acquisition

The federal regulators started investigating Musk for his late disclosure of his purchase of over 5% of Twitter’s shares. According to a Wall Street Journal article, Musk had purchased the shares without alerting other shareholders, saving him a significant amount of money.

13 May – Musk announces Twitter deal is on hold

Musk took to Twitter to announce that his buyout deal was put “on hold” following reports that over 5% of the social media application’s daily active users were spam accounts. Twitter shares dropped by more than 10%.

17 May 2022 – Musk says deal cannot move ahead unless he is proven wrong

Musk said that his Twitter buyout deal cannot move ahead unless Twitter proves his 5% spam accounts statements as false. The billionaire had urged the SEC to investigate the case.

25 May 2022 – Musk pledges additional $6.25 billion in equity financing for Twitter deal

Musk committed to provide an additional $6.25 billion in equity financing for his Twitter buyout deal, bringing his total equity commitment to $33.5 billion.