Elon Musk's Twitter profile displayed on a computer screen and Twitter logo displayed on a phone screen are seen in this illustration photo taken in Krakow, Poland on April 9, 2022.<\/p>\n
Jakub Porzycki | Nurphoto | Getty Images<\/p>\n
A group of Twitter shareholders are suing Elon Musk for allegedly failing to disclose he had bought a significant stake in the social media company in the right timeframe.<\/p>\n
The Tesla and SpaceX CEO revealed on April 4 that he had amassed a 9.2% stake inTwitter, leading shares to soar as investors viewed the move as a vote of confidence.<\/p>\n
But his disclosure may have been too late.<\/p>\n
Federal trade laws dictate that investors must inform the Securities and Exchange Commission within 10 days when they take a more than 5% stake in a company.<\/p>\n
Musk, who started buying Twitter stock in January, allegedly hit this milestone on March 14, meaning he should have informed the SEC by March 24.<\/p>\n
A representative for Musk, the richest person in the world, did not immediately respond to a CNBC request for comment.<\/p>\n
The lawsuit, filed Tuesday in New York by law firm Block & Leviton on behalf of several Twitter shareholders, alleges that Musk was able to buy up more Twitter stock at a deflated price in theperiod between passing the 5% threshold and publicly disclosing his stake.<\/p>\n
Half a dozen legal and securities experts have told The Washington Post that the delay may have helped Musk to net $156 million.<\/p>\n
Twitter's stock popped 27% on Apr. 4 after it was disclosed that Musk had amassed his 9.2% stake, worth almost $3 billion.<\/p>\n
The class action case has been filed on behalf of investors who claim they lost out on potential gains they could have realized had Musk disclosed his shareholding earlier.<\/p>\n
\"What seems crystal clear is that Elon Musk missed the applicable 10-day filing deadline under Sections 13(d) and 13(g) of the Securities Act of 1933 to report 5% ownership in a public company,\" Alon Kapen, a corporate transaction lawyer with Farrell Fritz, said in a statement shared with CNBC.<\/p>\n
\"That gave him an extra 10 days in which to buy additional shares (he increased his ownership during that time by an extra 4.1%) before the per share price spike that occurred when he finally announced his holdings on April 4,\" Kapen added.<\/p>\n
After the disclosure of his Twitter stake, Musk revealed that he also intended to take a seat on the board of the company. However, for reasons that have not been announced, he has decided not to take the seat.<\/p>\n
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The rest is here: <\/p>\n
Twitter investors sue Elon Musk for failing to promptly disclose stake<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Elon Musk's Twitter profile displayed on a computer screen and Twitter logo displayed on a phone screen are seen in this illustration photo taken in Krakow, Poland on April 9, 2022. Jakub Porzycki | Nurphoto | Getty Images A group of Twitter shareholders are suing Elon Musk for allegedly failing to disclose he had bought a significant stake in the social media company in the right timeframe. The Tesla and SpaceX CEO revealed on April 4 that he had amassed a 9.2% stake inTwitter, leading shares to soar as investors viewed the move as a vote of confidence. Continue reading