Lawsuit Alleges Elon Musk’s Non-Disclosure of Twitter Stake

Twitter Lawsuit: Elon Musk Allegedly Ignored Warnings on Stake Disclosure | Enterprise Wired

Share Post:


Source – NDTV

Ignored Warnings

Elon Musk allegedly disregarded repeated warnings concerning U.S. securities disclosure obligations related to his increasing stake in Twitter in 2022. A lawsuit filed in a Manhattan federal court claims that a Morgan Stanley executive, involved in secretly accumulating shares for Musk, had cautioned about the necessity to disclose ownership exceeding 5% in Twitter, as mandated by rules set by the U.S. Securities and Exchange Commission (SEC).

Fraud Allegations

The amended lawsuit, filed by a Twitter investor, accuses Elon Musk of defrauding investors by delaying the disclosure of his Twitter stake to accumulate shares at lower prices. Musk’s associate, Jared Birchall, reportedly collaborated with him to devise a clandestine trading strategy with the assistance of a managing director at Morgan Stanley. This strategy aimed to conceal Musk’s acquisition of Twitter shares and facilitate purchases at artificially reduced prices.

Legal Response

Both Musk and Birchall were not immediately available for comment on the allegations. However, in a statement, Morgan Stanley clarified that it is not a defendant in the lawsuit. The lawsuit highlights instances where the Morgan Stanley executive advised Birchall to seek legal counsel regarding disclosure requirements, to which Birchall allegedly falsely claimed consultation with lawyers until after amassing over a 9% stake in Twitter.

Musk’s History with Securities Laws

The lawsuit portrays the non-disclosure as a part of Musk’s history of disregarding federal securities laws and displaying contempt for the SEC. This latest episode adds to the ongoing feud between Musk and the top U.S. markets regulator, stemming back to 2018 when Musk infamously tweeted about having “funding secured” to take Tesla private.

Musk’s lawyers have previously argued that any failure in disclosure was inadvertent, citing Musk’s busy schedule. However, the lawsuit alleges that Musk and Birchall consciously ignored warnings about the disclosure requirement to avoid escalating costs and public attention associated with Musk’s purchases.

As legal proceedings unfold, the lawsuit sheds light on the complexities of securities regulations and the challenges faced by high-profile figures like Elon Musk in navigating them.



Five Below CEO Warns of Lingering Effects of Inflation

Five Below CEO Warns of Lingering Effects of Inflation

Source – NBC New York Challenges for Consumers Joel Anderson, CEO of discount retailer Five Below, expressed concerns about the…
FDA Rescinds Marketing Denial Orders for Juul Products

FDA Rescinds Marketing Denial Orders for Juul Products

Source – Reuters Reversal of Marketing Denial Orders The US Food and Drug Administration (FDA) announced on Thursday that it…
Antitrust Investigations Target Tech Giants' AI Dominance

Antitrust Investigations Target Tech Giants' AI Dominance

Source – Bloomberg Federal Scrutiny on Microsoft, OpenAI, and Nvidia The Federal Trade Commission (FTC) and the Justice Department are…
Rivian Unveils Upgraded R1 Pickup and SUV Models

Rivian Unveils Upgraded R1 Pickup and SUV Models

Source – CNBC Revamped Design and Enhanced Performance Rivian Automotive announced significant updates to its all-electric Rivian R1 pickup truck…