The lawsuit claims that Elon Musk intentionally obscured his acquisition of Twitter stock, saving himself more than $150 million while jeopardizing other investors.
A federal judge will allow former Twitter shareholders to continue their class-action lawsuit against billionaire Elon Musk.
According to CNBC, the lawsuit is filed under the name Rasella v. Musk in U.S. District Court for the Southern District of New York. Its plaintiffs include investors and retirement pension funds. Collectively, they claim that Musk’s failure to disclosure his acquisition of Twitter stock within a legally-mandated timeframe was unlawful and in violation of federal securities statutes.
One of the named plaintiffs, the Oklahoma Firefighters Pension and Retirement System, says that they sold shares of publicly-traded Twitter at “artificially deflated prices,” all while Musk obscured his continued acquisition of stock.
Musk’s attorneys have since argued that, while their billionaire client may have made a late disclosure, it was a mistake and entirely unintentional—Musk, they say, neither committed nor intended to commit any form of securities fraud.
However, in his Friday ruling, U.S. District Judge Andrew L. Carter found stated that Musk’s failure to disclose sent a “false pricing signal to the market.”
Carter also observed that, in March of 2022, Musk shared a tweet indicating that he was interested in purchasing another social media network, though he had by that time already purchased millions of shares of company stock.
Carter said that it was “reasonable” to interpret Musk’s tweet as “a statement meant to misdirect the public to think that buying Twitter was just a fantasy.” He also opined that “it is more likely than not that Musk issue da material misleading representation.”
After his acquisition of stock, Musk submitted a buyout bid of about $44 million. He later tried to renege, but was sued by Twitter for failing to fulfill his contractual obligation to purchase the company.
Musk has also faced pressure from the Securities and Exchange Commission, which has filed its own lawsuit against Musk in January 2025, six days before President Donald Trump’s inauguration.
In its complaint, the SEC claims that Musk amassed about $500 million in shares of Twitter; as a consequence of his failure to disclose the acquisition, he managed to underpay 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 said, accusing Musk of waiting 11 days before disclosing his stake.
Despite Musk’s privileged position within the Trump administration, the SEC has not dropped or sought 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
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