Twitter investor sues Elon Musk for not disclosing his shares within 10 daystext_fields
Elon Musk is in the soup, days after acquiring a 9.2% stake in Twitter.
After his deft move on 4 April, the social media company's share soared.
Investors viewed his entry in Twitter as a confidence booster. There's no looking back.
But one shareholder who smelt rat sued Elon Musk on Tuesday in a New York federal court.
The shareholder alleges that the Telsa CEO has failed to disclose his substantial stake in the company, affecting share price, according to The Guardian.
As per federal laws buying upwards of 5 per cent stake in a company requires investors to notify the Securities and Exchange Commission within 10 days.
The Telsa CEO wouldn't reveal his shares bought on 14 March until 4 April.
The lawsuit alleges that between crossing 5 per cent share and notifying, Musk bought up additional shares at a 'deflated price'.
Experts estimate that delay may have illegally netted Musk $156m, the report said.
Following Musk's disclosure of stake in Twitter, share price rose 27 per cent.
The plaintiff in the suit sold 35 Twitter shares for $1,373, or an average price of $39.23, before Musk revealed his investments, The Guardian reported.
The lawsuit seeks a jury trial for unspecified compensatory and punitive damages, it said.
After Musk became Twitter's largest shareholder with 9.2 per cent stake led to controversy at the time.
There were speculations of Musk likely to create broader changes in Twitter.
This was particularly so after Twitter declared on 5 April that Musk would join its board of directors.
Later Twitter CEO Parag Agrawal said Musk would not be joining the board.
The report said that by not joining the board Musk could keep buying up shares.
He wouldn't be bound by his agreement with the company to limit his stake to 14.9 per cent, according to the report.
Elon Musk was not reportedly available for comment.