This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
In a late night Wednesday filing, Twitter (now X) owner Elon Musk denied any ill intent in failing to inform the Securities and Exchange Commission (SEC) that he had acquired a substantive stake in the social media firm prior to taking it private. Musk's Twitter acquisition was filled with twists and turns, with the billionaire initially trying to stop the deal before signing up with a consortium of investors to take a multi billion dollar stake in the company. He is currently being sued by former shareholders who allege that Musk's late disclosure led them to miss out on profit taking as the social media company's shares soared by as much as 27% after his position became public. In his filing, Musk has asked for the suit to be dismissed and denied allegations of fraud.
Elon Musk Says Late Disclosure Of His Twitter Stake Was A Mistake
Details of Musk's statement were first covered by Reuters, and he denies any attempt to defraud Twitter shareholders by failing to follow the SEC's rules to disclose his stake in the company. The lawsuit against Musk and his trust was filed in September last year, and it alleges that the billionaire "hid and misrepresented his attempt" to influence Twitter's operations by acquiring a sizable stake in the company. It outlines that he first started to buy Twitter's shares in January 2022 and ended up spending $2.6 billion by early April.
On March 14th, Musk bought roughly 42 million Twitter shares, allowing him to control more than 5% of the company. This triggered a ten day window mandated by SEC's laws that required Musk to disclose his position in order to let other Twitter investors know that the firm might be the target of an activist investor. Over the next ten days after his disclosure period elapsed, the billionaire would go on to buy more shares, and as the shares remained steady, he saved more than $200 million, allege the investors.
Musk, however, denies these allegations and maintains that he did not defraud investors by failing to share the details of his stake. His filing claims that evidence shared by the plaintiffs points to a "mistake " that he rectified as soon as it became clear that he was in violation of Section 13 of the Securities and Exchange Act. The suit further alleges that when Musk disclosed his stake, he did so by filing a 13G form with the SEC, which allowed him to omit his intentions behind the shares. According to the investors, Musk should have filed a 13D disclosure instead since he intended to influence Twitter's operations.
Musk's court filing further denies that he worked with investment bank Morgan Stanley to buy Twitter shares in a manner that prevented the market from finding out. Musk is facing a separate fraud probe from the SEC related to his Twitter purchase. After initially refusing to attend the regulator's questioning sessions, he agreed to questioning in May after claiming that the SEC was harassing him.
