Musk, Twitter sued in California court over sale

Twitter shareholders filed a class-action lawsuit accusing Elon Musk of market manipulation and violating California corporate laws.

The lawsuit, filed in a California Northern District Court on Wednesday, alleges Musk directly benefited from the delay in disclosing his stake in Twitter and concealed his plans to become a board member in early April.

The complaint also alleges that Musk gobbled up shares of Twitter while having inside information about the network based on private conversations with executives and board members at the social media company, including former CEO Jack Dorsey, a longtime friend of Musk . Dorsey officially resigned from the board on Wednesday, in a planned exit after his term expires.

The lawsuit also alleges that Musk’s tweets about putting the deal “on hold” with Twitter was a market manipulation tactic to negotiate a better deal or kill it outright. Musk claimed he put the deal on hold because he was waiting for evidence to support Twitter’s claims that less than 5% of users on the platform are fake or spurious accounts, but people were quick to point out that his quick falling Tesla shares could be another reason for the reluctance.

“Musk’s tweet (and public statement) was misleading and constituted an attempt to manipulate the Twitter stock market since he knew all about the fake accounts,” the complaint reads.

According to the complaint, Musk “expressly waived detailed due diligence as a condition of his obligations under the acquisition agreement,” meaning there was nothing in the deal’s contract that would allow Musk to withdraw his bot investigation.

The complaint also alleges that Musk’s tactics caused chaos within Twitter and encouraged other market participants to short Twitter shares, including investment research firm Hindenburg Research.

Twitter declined to comment on the lawsuit.

Musk had a turbulent few months after the Twitter deal was announced. Not only has he been attacked over various aspects of the deal and his plans for Twitter, but earlier this month Musk was accused of paying hush money to a flight attendant after she reportedly embarrassed herself to him on a flight.

Read more about the Daily Dot’s technical and political coverage

*Initial publication: May 27, 2022 at 12:26 pm CDT

Jacob Seitz

Jacob Seitz is a freelance journalist originally from Columbus, Ohio, interested in the intersection of culture and politics.

Jacob Seitz

https://www.dailydot.com/debug/elon-musk-twitter-class-action/ Musk, Twitter sued in California court over sale

Jaclyn Diaz

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