The CEO of Tesla and SpaceX revealed on April 4 that he had accumulated a 9.2% stake in Twitter shares, which made the shares grow, as investors saw the move as a vote of confidence.
But the revelation may have been made too late. Federal trade laws stipulate that investors must notify the U.S. Securities and Exchange Commission (SEC) within 10 days of taking over a 5% stake in a company.
Musk, who began buying Twitter shares in January, reportedly reached that stage on March 14, which means he should have informed the SEC by March 24.
A representative of Musk, who is the richest man in the world, did not immediately respond to a request for comment from CNBC.
The lawsuit, filed Tuesday in New York by law firm Block & Leviton on behalf of several Twitter shareholders, claims that Musk managed to buy several Twitter shares at a reduced price, in the period between exceeding the 5% threshold and the public disclosure of his action.
Half a dozen legal and securities experts told The Washington Post that the delay could have helped Musk make $ 156 million.
Shares of Twitter rose 27% on April 4, after it was revealed that Musk had accumulated a 9.2% stake, worth almost $ 3 billion.
The class action lawsuit was filed on behalf of investors who say they lost some of the potential gains they could have made if Musk had revealed his involvement earlier.
“What is clear is that Elon Musk missed the 10-day filing period applicable under sections 13 (d) and 13 (g) of the Securities Act, 1933, to report a 5% ownership in a public company, ”said Alon Kapen, a corporate attorney at Farrell Fritz.
After revealing his participation on Twitter, Musk said he intends to take a seat on the company’s board of directors. However, for reasons that were not announced, he decided not to take the place.
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