Elon Musk must face class action over late disclosure of Twitter stake, judge rules
NEW YORK — Former Twitter investors who accuse Elon Musk of defrauding them by waiting too long to announce his initial investment in the social media company can pursue their case as a class action, a federal judge said Tuesday.
The decision by U.S. District Judge Andrew Carter in Manhattan reveals that the world’s richest person faces potential damages greater than those he would face if investors had to sue individually.
Musk’s lawyers did not immediately respond to requests for comment. Musk bought Twitter for $44 billion in October 2022 and renamed it X.
Investors, led by the Oklahoma Firefighters Retirement and Retirement System, said Musk ignored a March 24, 2022 deadline set by U.S. Securities and Exchange Commission rules to disclose his 5% ownership of Twitter shares and waited another 11 days before disclosing his 9.2% stake.
Investors said Musk saved more than $200 million and deceived them by selling Twitter shares at low prices over an 11-day period.
Investors said they relied on two tweets dated March 26, 2022, in which Musk said he was “seriously considering” creating a Twitter rival and said, “Haha that would be terrible” after someone suggested it buy Twitter and replace its bird logo with a picture of a dog.
In opposing class certification, Musk said investors could not prove they relied on the alleged fraud.
But the judge said he couldn’t get past the assumption that Musk’s alleged misrepresentations affected Twitter’s share prices and investors relied on his silence.
Carter also said that just because damages cannot be measured on a class-wide basis does not mean that class cannot be certified.
The case is separate from the trial in San Francisco federal court, where a jury found Musk liable on March 20 for trying to lower the purchase price by questioning whether Twitter was overrun by fake and spam accounts or bots.
Damages have not yet been determined. Musk is expected to appeal.
The SEC also sued Musk over his disclosure of a 5% Twitter stake. Both sides announced on March 17 that reconciliation talks were continuing.
This article has been generated from an automated news agency feed without modifications to the text.
