Elon Musk sued by Twitter investors for not disclosing shares

Elon Musk was sued by Twitter investors for not disclosing his stake in the company, as the Tesla owner mounts a $44 billion takeover bid for the social media platform.

The investors said that Musk saved himself $156 m by failing to disclose that he had purchased more than 5% of Twitter by March 14th.

After that, Musk continued to buy stock, and ultimately disclosed in early April that he owned 9.2% of the company, according to the lawsuit filed on Wednesday in San Francisco federal court.

The investors, led by Virginia resident William Heresniak, said that by delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price.

Neither Musk nor his lawyer responded immediately to requests for comment. Twitter didn't want to make a statement.

The recent drop in Tesla's stock has put Musk's ability to finance his acquisition of Twitter in major danger and he has pledged his shares as collateral to secure the loans he needs to buy the company, according to investors.

The shares of Tesla were trading around $700 on Thursday, down from above $1,000 in early April.

The timing of Musk revealing his stake has already triggered an investigation by the US Securities and Exchange Commission SEC, the Wall Street Journal reported earlier this month.

Musk pledged to provide additional $6.25 billion in equity financing in order to fund his bid for Twitter, a sign that he is working to complete the deal even though he last week conditioned its progress on Twitter, showing proof that spam bots accounted for less than 5% of its users.

In Wednesday s suit, the investors asked to be certified as a class and be awarded unspecified punitive and compensatory damages.