Elon Musk wants to dismiss a lawsuit by former Twitter shareholders who accused him of waiting too long in early 2022 to reveal his large ownership stake in the social media company, saying his delay was a mistake.
In a late Wednesday night filing in Manhattan federal court, Musk argued that it is implausible to believe he intended to defraud shareholders unaware of his 9.2% Twitter stake, causing them to miss out on significant gains by selling their stock prematurely.
Investors in the proposed class action claimed that Musk and his wealth manager Jared Birchall knew a U.S. Securities and Exchange Commission rule required Musk to disclose by March 24, 2022, that he had bought 5% of Twitter, yet waited another 11 days. The investors said this allowed Musk to buy more shares at lower prices, saving more than $200 million. Twitter, now known as X, rose 27% on April 4, 2022, after Musk revealed his 9.2% stake.
Musk, the world’s richest person according to Forbes magazine, and the head of other companies including electric car maker Tesla, stated in his filing that he had intended to reveal his Twitter stake at the end of 2022. He disclosed it promptly after realizing he misunderstood the SEC disclosure rule.
“This is not a scheme to defraud,” Musk said. “All indications–including those in the pleadings–point to a mistake.”
Musk also denied the investors’ claim that an unnamed Morgan Stanley banker helped devise a trading strategy to amass Twitter shares without alerting the broader market. Lawyers for the investors, led by an Oklahoma public pension fund, did not immediately respond to requests for comment on Friday.
Musk eventually bought San Francisco-based Twitter for $44 billion in October 2022. The SEC has also probed his Twitter stock purchases.
Last September, U.S. District Judge Andrew Carter refused to dismiss an earlier version of the lawsuit, finding evidence that Musk understood the SEC disclosure rule and testified about it under oath.
