On Tuesday in Manhattan Federal Court, a jilted Twitter investor accused and sued Tesla CEO, Elon Musk for violating a stock trading law.
Marc Bain Rasella filed what he hopes will be a class-action lawsuit against Musk over the billionaire’s process of buying shares of Twitter.
Musk purchased shares in small chunks day by day beginning Jan. 31, according to Securities and Exchange Commission filings.
He disclosed his purchases on April 4, when he’d obtained a 9% stake in Twitter and therefore became the company’s largest shareholder.
However, SEC rules require a person to declare their stake in a company within 10 days of acquiring 5% of its shares.
According to the suit, Musk hit that threshold on March 14, meaning he should’ve declared by March 24.
As soon as Musk’s massive stake, worth more than $2.5 billion, was made public April 4, Twitter’s stock price skyrocketed.
Rasella had sold some of his Twitter shares between March 24 and April 4. In the suit, he claimed that had he known Musk had invested in Twitter, he wouldn’t have sold.
The class-action suit seeks to represent anyone who sold Twitter stock between March 24 and April 4, claiming they were all shorted by Musk’s delayed disclosure. If the suit is allowed to go ahead, it could take months to track all those people down.
Additionally, the suit claims that because Musk delayed his filing and was able to keep buying shares at a lower price before his disclosure sent prices soaring, he illegally saved $143 million. Musk’s net worth is estimated at over $250 billion.
Following his massive investment, Musk was offered a seat on Twitter’s board of directors but turned it down. As of Tuesday night he has not responded to the suit, either in court or on Twitter.