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Another one – Lawsuit alleges Musk tanked Twitter’s share price on purpose

At this stage, one really has to wonder whether Elon Musk’s acquisition of Twitter is even worth it anymore, even for the memes.

The billionaire is now the target of yet another lawsuit related to his proposed acquisition of Twitter. This time, the allegation is that  Musk manipulated the market in order to tank Twitter’s share price in hopes of lowering the $44 billion he would have to pay to acquire the firm.

The lawsuit outlines the timeline of events that have lead up to the current situation with Twitter and Musk and raises some important questions. Once again Musk’s failure to file papers on time when he acquired a major stake in Twitter is highlighted but this lawsuit goes deeper.

The lawsuit is being brought by William Heresniak, a current shareholder of Twitter who is bring this action as a class action lawsuit.

Of note is the following statement.

“Before agreeing to buy Twitter for $44 billion, Musk, one of the world’s richest individuals valued at $276 billion according to the Bloomberg Billionaires Index, and a sophisticated businessman with a phalanx of lawyers and investment bankers, according to the press, specifically agreed to waive detailed due diligence as a condition of the merger agreement. At the time, Musk was well aware that Twitter had a certain amount of “fake accounts” and accounts controlled by “bots” and had in fact settled a lawsuit based on the fake accounts for millions of dollars. Musk had tweeted about that issue at Twitter several times in the past, prior to making his offer to acquire Twitter with full knowledge of the bots,” reads the lawsuit.

In defense of Musk, his issue is more with the pervasive nature of bots rather than their existence altogether. Note that Musk has challenged Twitter’s claim that bots and fake accounts make up less than 5 percent of Twitter accounts.

The lawsuit continues to paint a picture where Musk has been negligent in his pursual of Twitter. In fact, even his use of Tesla stock as a method to fund the acquisition was brought into question given that firm’s share price has tanked on the back of the Twitter debacle.

What this boils down to is that Musk made a bad deal, has since realised it’s a bad deal and is now allegedly tanking Twitter’s share price in a bid to pay less than $44 billion to acquire the firm.

The plantiff is asking the court to answer the following questions:

  • Whether Musk made false and misleading statements
  • Whether Musk has and continues to engage in conduct in an effort to manipulate the market for Twitter stock
  • Whether Musk created a false or misleading appearance with respect to the market for Twitter stock
  • Whether Musk engaged in conduct designed to raise or depress the price of Twitter stock for the purpose of inducing the purchase or sale of Twitter stock by others
  • Whether Musk purchased or sold Twitter stock based on material, non-public information
  • The extent of damage sustained by Class members.

The class action asks the court that Musk pay for damages caused to all members by his actions, should a judge decide as such as well as covering legal costs. Most importantly, this lawsuit could force Musk to abide by the $44 billion price tag.

Musk has not tweeted about this lawsuit – at least not explicitly – but when contacted for comment by Business Insider he responded via email, “Just because your name is Business Insider Trading doesn’t mean you should project that on others!”.

There’s no denying that Musk’s actions since announcing the acquisition have raised eyebrows. Whether he has done something wrong however, is for a court to decide.

 

[Image – CC 0 Pixabay]

 

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