Elon Musk Ordered to Face Lawsuit Alleging Fraud in Twitter Investment

Elon Musk, the renowned entrepreneur and CEO of Tesla, has been ordered by U.S. District Judge Andrew Carter to face a lawsuit accusing him of defrauding former Twitter shareholders. The lawsuit claims that Musk waited too long to disclose his investment in the social media company, which he later acquired and renamed X.

In his decision made public on Monday, Judge Carter ruled that shareholders in the proposed class action can proceed with their claims, arguing that Musk intentionally defrauded them by waiting 11 days past the SEC deadline to reveal his purchase of 5% of Twitter’s shares. However, the judge dismissed an insider trading claim against Musk.

According to the shareholders, Musk saved over $200 million by increasing his Twitter stake and engaging in secret discussions with the company’s executives before finally disclosing his 9.2% stake in April 2022. They also allege that Musk’s actions led to the sale of Twitter shares at artificially low prices.

Musk’s defense team argued that their client, being one of the busiest individuals on the planet, inadvertently failed to disclose the investment. However, Judge Carter found evidence suggesting that Musk understood the 5% disclosure rule, as he had testified about it under oath and had properly disclosed stakes in his other ventures, including Tesla and the former SolarCity, multiple times.

The case, titled Oklahoma Firefighters Pension and Retirement System v. Musk et al, is ongoing in the U.S. District Court for the Southern District of New York.

It is important to note that Musk’s acquisition of Twitter for $44 billion last October caused the company’s shares to surge by 27% when he revealed his 9.2% stake in April 2022. This move valued Twitter at $54.20 per share.

As the legal proceedings continue, the outcome of this lawsuit will undoubtedly have significant implications for Musk and the future of his business ventures.