Elon Musk founder, CEO, and chief engineer/designer of SpaceX speaks during a news conference after a Falcon 9 SpaceX rocket test flight at the Kennedy Space Center in Cape Canaveral, Fla, Jan. 19, 2020. Musk won't be joining Twitter's board of directors as previously announced. The tempestuous billionaire remains Twitter’s largest shareholder. (AP Photo/John Raoux, File)
By Michael Liedtke
Elon Musk’s huge Twitter investment took a new twist Tuesday with the filing of a lawsuit alleging that the colorful billionaire illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.
The complaint in New York federal court accuses Musk of violating a regulatory deadline to reveal he had accumulated a stake of at least 5%. Instead, according to the complaint, Musk didn’t disclose his position in Twitter until he’d almost doubled his stake to more than 9%. That strategy, the lawsuit alleges, hurt less wealthy investors who sold shares in the San Francisco company in the nearly two weeks before Musk acknowledged holding a major stake.
Musk's regulatory filings show that he bought a little more than 620,000 shares at $36.83 apiece on Jan. 31 and then continued to accumulate more shares on nearly every single trading day through April 1. Musk, best known as CEO of the electric car maker Tesla, held 73.1 million Twitter shares as of the most recent count Monday. That represents a 9.1% stake in Twitter.
The lawsuit alleges that by March 14, Musk's stake in Twitter had reached a 5% threshold that required him to publicly disclose his holdings under U.S. securities law by March 24. Musk didn't make the required disclosure until April 4.
That revelation caused Twitter's stock to soar 27% from its April 1 close to nearly $50 by the end of April 4's trading, depriving investors who sold shares before Musk's improperly delayed disclosure the chance to realize significant gains, according to the lawsuit filed on behalf of an investor named Marc Bain Rasella. Musk, meanwhile, was able to continue to buy shares that traded in prices ranging from $37.69 to $40.96.
The lawsuit is seeking to be certified as a class action representing Twitter shareholders who sold shares between March 24 and April 4, a process that could take a year or more.
Musk spent about $2.6 billion on Twitter stock — a fraction of his estimated wealth of $265 billion, the largest individual fortune in the world. In a regulatory filing Monday, Musk disclosed he may increase his stake after backing out of an agreement reached last week to join Twitter's board of directors.
Jacob Walker, one of the lawyers that filed the lawsuit against Musk, told The Associated Press that he hadn't reached out to the Securities and Exchange Commission about Musk's alleged violations about the disclosure of his Twitter stake. “I assume the SEC is well aware of what he did," Walker said.
An SEC spokesperson declined to comment.
The SEC and Musk have been wrangling in court since 2018 when Musk and Tesla agreed to pay a $40 million fine t o settle allegations that he used his Twitter account to mislead investors about a potential buyout of the electric car company that never materialized. As part of that deal, Musk was supposed to obtain legal approval for his tweets about information that could affect Tesla's stock price — a provision that regulators contend he has occasionally violated and that he now argues unfairly muzzles him.
Musk didn't immediately respond to a request for comment posted on Twitter, where he often shares his opinion and thoughts. Alex Spiro, a New York lawyer representing Musk in his ongoing dispute with the SEC, also didn't immediately respond to a query from The Associated Press.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
