Elon Musk’s Twitter profile was captured on a computer screen alongside the Twitter logo displayed on a phone in a striking illustration taken in Krakow, Poland, on April 9, 2022. (Photo credit: Jakub Porzycki | Nurphoto | Getty Images)
A federal judge ruled on Friday that a proposed class-action lawsuit against Elon Musk and his family office, Excession, can move forward. This decision comes after Musk’s attempt to have the case thrown out. The lawsuit, filed under Rasella v. Musk (Case No. 1:22-cv-03026-ALC-GWG), is being heard in the Southern District of New York.
Former Twitter shareholders initiated the lawsuit, claiming they incurred financial losses as Musk quietly accumulated a significant stake in Twitter without timely disclosures required by law. Among the plaintiffs are the Oklahoma Firefighters Pension and Retirement System, who argue that they sold shares of the then publicly-traded Twitter at prices lower than they would have been if Musk’s dealings had been transparent.
Despite efforts to reach out, Elon Musk and Jared Birchall haven’t commented on the situation. Musk’s legal team insists the late disclosure was a simple oversight, arguing there was no intention of committing securities fraud.
Judge Andrew L. Carter of the Southern District of New York sided with the plaintiffs’ argument. In his ruling, he noted that Musk’s delayed disclosure misled the market about Twitter’s share pricing. The judge’s 43-page opinion highlighted that Musk tweeted on March 26, 2022, about possibly acquiring a different social network, even though he had amassed a substantial number of Twitter shares by March 25.
Judge Carter suggested that Musk’s tweet could reasonably be seen as a deliberate effort to mislead the public into believing his interest in Twitter was mere speculation. Eventually, Musk launched a successful bid and orchestrated a leveraged buyout of Twitter in 2022, a move valued at approximately $44 billion which resulted in significant changes to the company, including rebranding it to X.
Additionally, the Securities and Exchange Commission previously brought a similar lawsuit against Musk for not adequately disclosing his Twitter stock purchases in 2022, prior to his acquisition of the social media giant.
On Friday, Musk announced that xAI, another one of his ventures, is merging with the social network. This all-stock transaction sets a valuation of $80 billion for the AI company and $33 billion for the social media platform.
